Several years ago Malcolm Gladwell wrote a book entitled Blink. In this book he discussed research on the quick inferences from snippets of behavior, biases in judgment and the differences between automatic and controlled processes in perceptions and attitudes. He described how people filter complex information and come up with snap judgments. This can be a huge impediment to good judgment. The Gladwell book left a lot to be desired in terms of explanations and ramifications. Daniel Kahneman's book, Thinking, Fast and Slow is a much more comprehensive text.
Kahneman, who won the 2002 Nobel Prize in economics, challenges the idea that individuals are rational and shows that fear and love explain many of the departures from rationality. He also shows that luck plays a major role in our successes or failures. Early in the book Kahneman introduces the two major players whom he calls System 1 (S1) and System 2 (S2). S1 is fasts acting, can't be turned off, has little if any understanding of logic, operates automatically, effortlessly and without conscious control. S2 is rational, diligent, compares and contrasts, weight pros and cons, plans and tries to control our thoughts and behaviors emanating from S1. S1 is gullible, S2 is forever doubting. It is the interplay between these two forces that determines our success or failure in out perceptions and judgments.
Kahneman discussed Bayesian theory, regression to the mean, loss aversion (losses are more important than gains), and the operation of heuristic principles such as anchoring, representativeness, and availability. He also discusses prospect theory ( how losses and gains are represented).
We would all like to be better decision makers. After reading this book I was left a bit frustrated because experts repeat their mistakes just as novices do and the effort to overcome biases is extraordinarily labor-intensive with lots of self-monitoring and self-control. One will need to know when to activate S2 to correct biases generated by S1 and furthermore to know when to activate S2 to correct the perceptions and judgments of others. I learned a lot by reading the book and I became even more aware of the pitfalls at hand and in the future.