Daniel Kahneman's two systems of thinking - Revision history

JohanHolgerRasmussen: /* The denominator neglect */

2021-02-27T11:30:41Z

The denominator neglect

← Older revision		Revision as of 11:30, 27 February 2021
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	Even though the test subjects are university students, which assumable are good enough at fractions, that they can calculate the chance of drawing a winning marble, a large part of them answers before they initiate the system 2.		Even though the test subjects are university students, which assumable are good enough at fractions, that they can calculate the chance of drawing a winning marble, a large part of them answers before they initiate the system 2.

	The denominator neglect is important to consider in project risk management among others, and especially when representing risk to other team members and stakeholders. When assessing risk management, it could be an idea to consider the reporting formats (PMI, 2017, page 408). This is important so that when presenting risk, the project manager does not favor any specific stakeholder, if presenting and reporting the risk consistently throughout the project.		The denominator neglect is important to consider in project risk management among others, and especially when representing risk to other team members and stakeholders. When assessing risk management, it could be an idea to consider the reporting formats (PMI, 2017, page 408) <ref name="Guide to the Project Management Body of Knowledge">Project Management Institute, Inc.. (2017). Guide to the Project Management Body of Knowledge (PMBOK® Guide) (6th Edition)</ref>. This is important so that when presenting risk, the project manager does not favor any specific stakeholder, if presenting and reporting the risk consistently throughout the project.

	== Annotated bibliography ==		== Annotated bibliography ==

JohanHolgerRasmussen: /* The denominator neglect */

2021-02-27T11:30:10Z

The denominator neglect

← Older revision		Revision as of 11:30, 27 February 2021
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	Even though the test subjects are university students, which assumable are good enough at fractions, that they can calculate the chance of drawing a winning marble, a large part of them answers before they initiate the system 2.		Even though the test subjects are university students, which assumable are good enough at fractions, that they can calculate the chance of drawing a winning marble, a large part of them answers before they initiate the system 2.

	The denominator neglect is important to consider in project risk management among others, and especially when representing risk to other team members and stakeholders.		The denominator neglect is important to consider in project risk management among others, and especially when representing risk to other team members and stakeholders. When assessing risk management, it could be an idea to consider the reporting formats (PMI, 2017, page 408). This is important so that when presenting risk, the project manager does not favor any specific stakeholder, if presenting and reporting the risk consistently throughout the project.

	== Annotated bibliography ==		== Annotated bibliography ==

JohanHolgerRasmussen: /* Annotated bibliography */

2021-02-27T10:57:14Z

Annotated bibliography

← Older revision		Revision as of 10:57, 27 February 2021
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	'''Project Management Institute, Inc.. (2017). Guide to the Project Management Body of Knowledge (PMBOK® Guide) (6th Edition)'''		'''Project Management Institute, Inc.. (2017). Guide to the Project Management Body of Knowledge (PMBOK® Guide) (6th Edition)'''
			Is used in the article to angle the different theories from the book thinking, fast and slow into different project management phases. In some cases the PMI standard is also used as for tools to prohibit the different products of biases

	== References ==		== References ==
	<references/>		<references/>

JohanHolgerRasmussen: /* The control illusion */

2021-02-27T10:53:19Z

The control illusion

← Older revision		Revision as of 10:53, 27 February 2021
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	=== The control illusion ===		=== The control illusion ===
	[[File:5 why-page-001 (1).jpg\|400px\|thumb\|right\|~~Three point estimation figure,~~ made by Johan Holger Rasmussen]]		[[File:5 why-page-001 (1).jpg\|400px\|thumb\|right\|5 whys illustration made by Johan Holger Rasmussen]]
	Also known as the illusion of control, the control illusion is a state whereas individuals believe they have more control over a situation that they actually do. This makes people misjudge decisions, mainly because of their lack of knowledge of a situation, which can lead to underestimating of external influences. The illusion is partly influenced by the optimism bias, that makes people think that the future is bright, and therefore doesn’t take risk into consideration. System 1 is the prime influence in the illusion of control, because it is fast to come up with solutions to things, which sometimes people don’t have control over <ref name="Thinking, fast and slow">Kahneman, D. (2012) Thinking, fast and slow . London: Penguin.</ref>.		Also known as the illusion of control, the control illusion is a state whereas individuals believe they have more control over a situation that they actually do. This makes people misjudge decisions, mainly because of their lack of knowledge of a situation, which can lead to underestimating of external influences. The illusion is partly influenced by the optimism bias, that makes people think that the future is bright, and therefore doesn’t take risk into consideration. System 1 is the prime influence in the illusion of control, because it is fast to come up with solutions to things, which sometimes people don’t have control over <ref name="Thinking, fast and slow">Kahneman, D. (2012) Thinking, fast and slow . London: Penguin.</ref>.

JohanHolgerRasmussen: /* The anchoring effect */

2021-02-27T10:52:38Z

The anchoring effect

← Older revision		Revision as of 10:52, 27 February 2021
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	Earlier research done by Kahneman together with Amos Tversky showed, that when people were presented with a number about a subject before asked to take a stand on the same subject, the number presented would have great impact on the final decision <ref name="Thinking, fast and slow">Kahneman, D. (2012) Thinking, fast and slow . London: Penguin.</ref>. Kahneman exemplifies this by asking if Gandhi was younger or older than 144 years, when he died. This question has the reader anchoring at 144, and even though we know that Gandhi of cause did not reach the astonishing 144 years, we now believe him to have died at a very high age. This is what is called the anchoring effect.		Earlier research done by Kahneman together with Amos Tversky showed, that when people were presented with a number about a subject before asked to take a stand on the same subject, the number presented would have great impact on the final decision <ref name="Thinking, fast and slow">Kahneman, D. (2012) Thinking, fast and slow . London: Penguin.</ref>. Kahneman exemplifies this by asking if Gandhi was younger or older than 144 years, when he died. This question has the reader anchoring at 144, and even though we know that Gandhi of cause did not reach the astonishing 144 years, we now believe him to have died at a very high age. This is what is called the anchoring effect.
	Even in situations, where there is no logical correlation between the anchor presented to people and their answer about a different subject, the anchor would still have an impact on the answer. This is one of the things that makes system 2 susceptible to biasing influences, and therefore a vital weakness in projects and decision making in general. As cited earlier, system 2 is continuously influenced with impressions, intuitions etc. from system 1 which means that people, reluctantly, make decisions without having a logic argumentation.		Even in situations, where there is no logical correlation between the anchor presented to people and their answer about a different subject, the anchor would still have an impact on the answer. This is one of the things that makes system 2 susceptible to biasing influences, and therefore a vital weakness in projects and decision making in general. As cited earlier, system 2 is continuously influenced with impressions, intuitions etc. from system 1 which means that people, reluctantly, make decisions without having a logic argumentation.
	[[File:Tre punkts 2-page-001.jpg\|300px\|thumb\|right\|Three point estimation]]		[[File:Tre punkts 2-page-001.jpg\|300px\|thumb\|right\|Three point estimation, made by Johan Holger Rasmussen]]
	There are several parts of projects where the anchoring effect is important to consider, e.g: project cost management (PMI, 2017, chapter 7) <ref name="Guide to the Project Management Body of Knowledge">Project Management Institute, Inc.. (2017). Guide to the Project Management Body of Knowledge (PMBOK® Guide) (6th Edition)</ref>. Consider the following situation, a project manager is continuously working on two projects which is far from each other in cost. When shifting between the two projects, the former project is going to make an anchor in the projects manager’s mind. E.g., in the larger project the project manager has to order 1000 windows for a construction project, and because of the large quantity, the project manager can get a considerable discount, but would still have to accept a high total price. When the project manager then soon after starts working on the other smaller project, this price would have left an anchor. Which means that the project manager, both would make higher estimates of total cost, but also lower estimation cost per window/unit because lack of quantity discount.		There are several parts of projects where the anchoring effect is important to consider, e.g: project cost management (PMI, 2017, chapter 7) <ref name="Guide to the Project Management Body of Knowledge">Project Management Institute, Inc.. (2017). Guide to the Project Management Body of Knowledge (PMBOK® Guide) (6th Edition)</ref>. Consider the following situation, a project manager is continuously working on two projects which is far from each other in cost. When shifting between the two projects, the former project is going to make an anchor in the projects manager’s mind. E.g., in the larger project the project manager has to order 1000 windows for a construction project, and because of the large quantity, the project manager can get a considerable discount, but would still have to accept a high total price. When the project manager then soon after starts working on the other smaller project, this price would have left an anchor. Which means that the project manager, both would make higher estimates of total cost, but also lower estimation cost per window/unit because lack of quantity discount.

JohanHolgerRasmussen: /* The control illusion */

2021-02-27T10:52:14Z

The control illusion

← Older revision		Revision as of 10:52, 27 February 2021
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	=== The control illusion ===		=== The control illusion ===
	[[File:5 why-page-001 (1).jpg\|400px\|thumb\|right\|Three point estimation]]		[[File:5 why-page-001 (1).jpg\|400px\|thumb\|right\|Three point estimation figure, made by Johan Holger Rasmussen]]
	Also known as the illusion of control, the control illusion is a state whereas individuals believe they have more control over a situation that they actually do. This makes people misjudge decisions, mainly because of their lack of knowledge of a situation, which can lead to underestimating of external influences. The illusion is partly influenced by the optimism bias, that makes people think that the future is bright, and therefore doesn’t take risk into consideration. System 1 is the prime influence in the illusion of control, because it is fast to come up with solutions to things, which sometimes people don’t have control over <ref name="Thinking, fast and slow">Kahneman, D. (2012) Thinking, fast and slow . London: Penguin.</ref>.		Also known as the illusion of control, the control illusion is a state whereas individuals believe they have more control over a situation that they actually do. This makes people misjudge decisions, mainly because of their lack of knowledge of a situation, which can lead to underestimating of external influences. The illusion is partly influenced by the optimism bias, that makes people think that the future is bright, and therefore doesn’t take risk into consideration. System 1 is the prime influence in the illusion of control, because it is fast to come up with solutions to things, which sometimes people don’t have control over <ref name="Thinking, fast and slow">Kahneman, D. (2012) Thinking, fast and slow . London: Penguin.</ref>.

JohanHolgerRasmussen at 10:50, 27 February 2021

2021-02-27T10:50:54Z

← Older revision		Revision as of 10:50, 27 February 2021
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			Written by Johan Holger Rasmussen

	“Questioning what we believe and want is difficult at the best of times, and especially difficult when we most need to do it” (Kahneman, 2012, page 3) <ref name="Thinking, fast and slow">Kahneman, D. (2012) Thinking, fast and slow . London: Penguin.</ref>. In many ways, this claim describes Kahneman’s over all mission with his bestselling book, “Thinking fast and slow”, in which he seeks to show the reader, how our everyday decision making is filled with biases.		“Questioning what we believe and want is difficult at the best of times, and especially difficult when we most need to do it” (Kahneman, 2012, page 3) <ref name="Thinking, fast and slow">Kahneman, D. (2012) Thinking, fast and slow . London: Penguin.</ref>. In many ways, this claim describes Kahneman’s over all mission with his bestselling book, “Thinking fast and slow”, in which he seeks to show the reader, how our everyday decision making is filled with biases.

JohanHolgerRasmussen: /* The denominator neglegt */

2021-02-27T10:12:53Z

The denominator neglegt

← Older revision		Revision as of 10:12, 27 February 2021
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	One solution to work against the control illusion is to use the 5 whys technique to find the root cause of a problem that has happened in the past. The main reason that the 5 whys technique work is that a problem which normally would get assessed by system 1, now must get answered by 5 questions in correlation, and therefore eliminates the fast thinking of system 1.		One solution to work against the control illusion is to use the 5 whys technique to find the root cause of a problem that has happened in the past. The main reason that the 5 whys technique work is that a problem which normally would get assessed by system 1, now must get answered by 5 questions in correlation, and therefore eliminates the fast thinking of system 1.

	=== The denominator ~~neglegt~~ ===		=== The denominator neglect ===
	When presented chance of events happening, no matter if it is positive or negative for the project, the way the chance is presented have a large impact on how individuals process it. If presented with the chance as a fraction, people tend to focus a lot more on the numerator, than the numerator compared to the denominator. Kahneman presents the example that students are presented with two urns where the first contains 1 red marble out of 10, and the second contains 8 red marbles out of 100. They then afterwards must pick an urn to draw a marble from where they win a prize, if they draw a red marble <ref name="Thinking, fast and slow">Kahneman, D. (2012) Thinking, fast and slow . London: Penguin.</ref>.		When presented chance of events happening, no matter if it is positive or negative for the project, the way the chance is presented have a large impact on how individuals process it. If presented with the chance as a fraction, people tend to focus a lot more on the numerator, than the numerator compared to the denominator. Kahneman presents the example that students are presented with two urns where the first contains 1 red marble out of 10, and the second contains 8 red marbles out of 100. They then afterwards must pick an urn to draw a marble from where they win a prize, if they draw a red marble <ref name="Thinking, fast and slow">Kahneman, D. (2012) Thinking, fast and slow . London: Penguin.</ref>.

JohanHolgerRasmussen: /* The denominator effect */

2021-02-27T10:12:40Z

The denominator effect

← Older revision		Revision as of 10:12, 27 February 2021
Line 57:		Line 57:
	One solution to work against the control illusion is to use the 5 whys technique to find the root cause of a problem that has happened in the past. The main reason that the 5 whys technique work is that a problem which normally would get assessed by system 1, now must get answered by 5 questions in correlation, and therefore eliminates the fast thinking of system 1.		One solution to work against the control illusion is to use the 5 whys technique to find the root cause of a problem that has happened in the past. The main reason that the 5 whys technique work is that a problem which normally would get assessed by system 1, now must get answered by 5 questions in correlation, and therefore eliminates the fast thinking of system 1.

	=== The denominator ~~effect~~ ===		=== The denominator neglegt ===
	When presented chance of events happening, no matter if it is positive or negative for the project, the way the chance is presented have a large impact on how individuals process it. If presented with the chance as a fraction, people tend to focus a lot more on the numerator, than the numerator compared to the denominator. Kahneman presents the example that students are presented with two urns where the first contains 1 red marble out of 10, and the second contains 8 red marbles out of 100. They then afterwards must pick an urn to draw a marble from where they win a prize, if they draw a red marble <ref name="Thinking, fast and slow">Kahneman, D. (2012) Thinking, fast and slow . London: Penguin.</ref>.		When presented chance of events happening, no matter if it is positive or negative for the project, the way the chance is presented have a large impact on how individuals process it. If presented with the chance as a fraction, people tend to focus a lot more on the numerator, than the numerator compared to the denominator. Kahneman presents the example that students are presented with two urns where the first contains 1 red marble out of 10, and the second contains 8 red marbles out of 100. They then afterwards must pick an urn to draw a marble from where they win a prize, if they draw a red marble <ref name="Thinking, fast and slow">Kahneman, D. (2012) Thinking, fast and slow . London: Penguin.</ref>.

JohanHolgerRasmussen: /* The denominator effect */

2021-02-27T10:07:57Z

The denominator effect

← Older revision		Revision as of 10:07, 27 February 2021
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	=== The denominator effect ===		=== The denominator effect ===
	When presented chance of events happening, no matter if it is positive or negative for the project, the way the chance is presented have a large impact on how individuals process it. If presented with the chance as a fraction, people tend to focus a lot more on the numerator, than the numerator compared to the denominator. Kahneman presents the example that students are presented with two urns where the first contains 1 red marble out of 10, and the second contains 8 red marbles out of 100. They then afterwards must pick an urn to draw a marble from where they win a prize, if they draw a red marble.		When presented chance of events happening, no matter if it is positive or negative for the project, the way the chance is presented have a large impact on how individuals process it. If presented with the chance as a fraction, people tend to focus a lot more on the numerator, than the numerator compared to the denominator. Kahneman presents the example that students are presented with two urns where the first contains 1 red marble out of 10, and the second contains 8 red marbles out of 100. They then afterwards must pick an urn to draw a marble from where they win a prize, if they draw a red marble <ref name="Thinking, fast and slow">Kahneman, D. (2012) Thinking, fast and slow . London: Penguin.</ref>.

	Again, here system 1 is the prime influencer on this neglect, because 30-40% of the students picked the urn with 8 red marbles, which is also the urn with the least chance of winning a prize. This is because system 1 paints a picture of 8 red marbles laying in a pool of non-prize marbles, and the same goes for the first urn, where the only is one winning marble.		Again, here system 1 is the prime influencer on this neglect, because 30-40% of the students picked the urn with 8 red marbles, which is also the urn with the least chance of winning a prize. This is because system 1 paints a picture of 8 red marbles laying in a pool of non-prize marbles, and the same goes for the first urn, where the only is one winning marble <ref name="Thinking, fast and slow">Kahneman, D. (2012) Thinking, fast and slow . London: Penguin.</ref>.

	Even though the test subjects are university students, which assumable are good enough at fractions, that they can calculate the chance of drawing a winning marble, a large part of them answers before they initiate the system 2.		Even though the test subjects are university students, which assumable are good enough at fractions, that they can calculate the chance of drawing a winning marble, a large part of them answers before they initiate the system 2.