Kahneman - Two Thinking Systems

Revision as of 22:02, 19 February 2021

Every day we make decisions from the simple ones as to put on pants or not, to take more complex decisions where large consequences are at stake, such as to choose the right material within a budget to build a bridge where road users are able to cross a river safely. The two types of decisions have different time duration for consideration, where the first decision is rather automated, the second one requires more time to investigate the alternatives in order to make the most satisfactorily choice regarding the safety of the road users.

The many years of research performed by Noble Prize winner of economics, Daniel Kahneman and Amos Tversky (died 1996) is distilled into a book titled; “Thinking, Fast & Slow”^[1], which were published by Kahneman in 2011. Kahneman’s thesis has revolutionized the understanding of the human behavior and highlights our cognitive biases and thereby shows the brilliance and the limitations of the human mind. Kahneman discovered the two operating systems of our brain; System 1, which represents fast thinking and System 2, which represents slow thinking. The discovery of this dichotomy shows that the two systems of thinking will arrive at different end-results with identical input of data.

Decision-making is crucial in project, programming, and portfolio management, which makes Kahneman’s revolutionary discovery essential to the understanding of how we as humans act. This article will focus on the two-thinking systems in relation to project management ^[2], how it effects the engine of human thinking and how we can learn to actively use the two systems most effectively when managing projects.

Why even bother?

Project management as a job can be described as the way a person organizes and manage the resources, that are necessary to complete a specific project ^[2]. Every project has criteria within agreed parameters that must be achieved. In order to succeed with this, a project manager must handle processes, methods, skills, knowledge, and have the correct experience to achieve those parameters on an acceptable level ^[3]. In other words, a project manager is not only responsible for planning and overseeing the whole project, but also interacting with both personnel and stakeholders.

The role of a project manager requires a certain skillset such as a high level of communication, the ability to share a clear vision and to motivate the colleagues to perform at their best ^[4]. The project manager has responsibility for the whole “project life cycle” ^[5]. The role of a project manager also requires the skills to be able to solve problems, building a team, to delegate, to make decisions, and to show integrity ^[2]. In other words, it requires the skill of shaping the required behavior of the people involved in the project in order to accomplish your task in the best possible way. How do they work?, how do they think?, how do they commit to the project? We will look at these questions and try to come up with some answers. Furthermore, we will look at the changing and shaping of the certain behavior amongst co-workers through focusing on Kahneman’s theory about fast and slow thinking. This theory is built on the two fictional systems; System 1 and System 2.

System 1

System 1 is the automated system which we as human has no control over. System 1 relates to our feelings and our memory and is based on first impressions and intuition. As Kahneman states in his work “System 1 operates automatically and quickly, with little or no effort, and with no sense of voluntary control” ^[1]. It is possible to show some examples of the characteristics of System 1.

• Orient on the source of an unexpected sound
• Answer simple mathematical questions as 1+2 = ?
• Read words on large billboards
• Depth between two objects (which object is closer than the other)
• Understand simple sentences
• Connect specified characteristics with stereotypes (curly long hair, tanned, seashell necklaces, loving the sea equals to a “surfer dude”) ^[1]

System 1 is the system humans use almost all the time. When System 1 meets difficulty, it calls on System 2 to support with more details to solve the current problem. As humans we tend to believe that we are rational human beings and always in control. We tend to believe that we have reasons for our course of action which refers to System 2, but it has been proven we are not in control. This might be hard to believe, but System 1 is generally very good at what it does. Its short-term predictions are normally accurate, it can model familiar situation and its initial reaction to challenges are generally quick and suitable. One of the disadvantages of System 1 is that due to its speed, where a decision is made within a short time, it is prone to errors and is easily biased.

System 2

Figure 1: An overview of the significant differences between System 1 and System 2 made with Microsoft Powerpoint Icons by Julie Finne-Ipsen

System 2 is deliberate and controlling which makes it possible for us to solve complicated computations. It can be very effective if we slow things down and focus. It makes it possible for us to control/restrain our actions and can make us blind or deaf to the surroundings that are not implicated in the task that it is used on. This is tested in “The Invisible Gorilla” study by Christopher Charbis and Daniel Simons ^[6]. System 2 has the advantage that it can register things that System 1 does not see and that it is logical, thus less error prone. The various operations of System 2 have one thing in common – they require your full attention, and the operations are disrupted when attention is drawn to something else. Below are some examples of System 2 activities.

• Calculate a more complicated mathematical expression (27 x 43 = ?)
• Spot a woman with white hair in a crowd
• Focus on a certain voice in a noisy room
• Compare two similar products to determine the overall value
• Monitor your appropriateness in a social gathering
• Check the validity of complex logical argument
• Control outburst when needed in social circumstances

So why don’t we use the more logical System 2 all the time? The main reason is ego depletion. The heavy work of using System 2 causes ego depletion which means that our self-control and willpower draws upon a limited pool of mental resources ^[7]. System 2 uses so much more energy and therefore its mentally tiring for our mind and physically exhaust our bodies to cope with the logical thinking all the time. Therefore, System 2 is working on low effort especially compared to the highly active System 1. System 2 has the advantage that by operating at a minimum effort, it can still be used to optimize performance. As an example, you are able to control your feelings when it is necessary. It can be in a situation where your boss is being rude, but you still need to control yourself and put up a facade in order not to scream at her and tell her to shut up. System 1 & 2 are complementary systems that works together to produce an effective and efficient decisions in any situation we find ourselves in. System 2 is considered lazy, but a reason for this slow processing is the sheer availability of continuous information from System 1. The quick intuitive respond to changing circumstances performed by System 1 is far greater than the effort it requires to leverage and engage the logic of System 2. Hence, whenever System 2 is engaged in a decision, it often has the last word in the decision. Some of the significant differences between System 1 and System 2 are illustrated in Figure 1.

Impact of the two-thinking system regarding project management

The thesis about System 1 & 2 enlightens how choices are made in business and in our personal life. In theory, there are some mental aspects which can be related to project management. Kahneman describes bias, effects, fallacies, illusions, and neglects as a part of our mind which can have a considerably impact on us and our decisions. These factors will be discussed in context with a view to project management.

Bias

A cognitive bias is a systematic pattern that diverges from rational judgement and norms. Kahneman discusses three types of bias; confirmation, hindsight and outcome biases.

The confirmation bias is a result of selective thinking. It is described as when we have a belief and only seek out information that confirms our belief instead of focusing on things that can challenge it. In brief, System 1 notices and more easily remembers information that supports our idea, while System 2 is being motivated to analyze new information that supports the existing belief. In project management, this will often occur due to the fact that people tend to find data (statistic, literature, processes etc.) to support their specific idea and thereby ignore all other data. How can we prevent selective thinking in project management? A method to handle this can be to challenge the data identified by seeking any disagreement. Moreover, we can perform extensive research and ensure that we ask the right questions. Thereby, it can be possible to remove the ego and the selective thinking, and finally end up with a non-biased decision

Effects

Kahneman identified twelve effects originated from cognitive bias’ some of them are named; the anchoring effect, the halo effect, the endowment effect, the priming effect, the possibility effect etc. As an relevant example within project management we have the anchoring effect. The anchoring effect is a phenomenon where the project manager often uses System 2 to rationally analyze the input before making a choice or determine a value. However, it often ends up with the project manager lingering to the first perception. Which result in that other relevant perspectives/factors are neglected or ignored. This is an issue when performing as a project manager because one of the important features of the job is to analyze constrains and have an overview of the most aspects of the project. The anchoring effect is difficult to avoid and it reduces the value of project management techniques and tools because the result is already based on the first perception. Anchoring occurs due to either the deliberate adjustment in System 2, which basically means that our System 2 is too lazy to reevaluate or by priming in System 1, where we, based on an initial impression, tend to stick to a certain reference point and thereby influence subsequent decisions.

A secure method to prevent anchoring in project management is by using “the devil’s advocate”, which directly challenges the first perception. The devil’s advocate is shortly described as a person who is chosen to present arguments against a proposed idea. In industries where agile planning is often used, a method called poker planning is used to prevent anchoring because it forces you to argue with your colleagues [link til poker planning].

Another example of a cognitive biased effect is the halo effect. This phenomenon appears when we see a person that is performing good during task A, which then leads to automatically assuming, that the same person will also excel at task B. If someone has a certain characteristic look or competence it often tends to affect our overall assessment of that person. The halo effect has a major impact on your organization which means it also affects the project manager. The halo effect has some drawbacks which need to be enlightened. Firstly, it can create favoritism within the project team which eventually can lead to conflict. If the project manager is biased by the halo effect, it can also affect the changeability within the project. If you tend to “like” colleague A, then you are more likely to present him to more tasks which he may not be the best qualified employee to take on. This reduces the changeability in the project and can reduce the level of the final outcome of the project. If you are affected by the halo effect, you risk that your decisions are based on the wrong parameters.

A method to take the personal judgement out of the assessment of an individual is to try a more objectively approach. This can be done either by status reports and statistics or by anonymizing the assessment of each individual and try not to compare the co-workers ^[8].

Fallacies

A fallacy is the use of a faulty reasoning when constructing an argument [fallacies]. Fallacies often happen when substituting an easy question with a hard question. As mentioned before, the easy question will quickly be solved by System 1. The hard question is more requiring and thereby System 2 is needed to come up with a more satisfying solution to the mind. A fallacy happens when System 2 applies faulty rules or is not alerted well enough ^[9]. In the two-thinking system theory we are introduced to four fallacies.

The planning fallacy is truly a familiar phenomenon in project management. This faulty reasoning is when people underestimate the costs, risks of planned actions and completion time, and at the same time overestimate the benefits of the same actions. A counter action is to actually accept planning fallacy and thereby take the necessary time to consider it as a factor. A method to prevent or reduce fallacies is to use more of the known management tools in order to challenge the data and evaluate the mistakes that are being made. The planning fallacy can be reduced having constant follow ups on the project, but this is often considered relatively time consuming Cite error: Closing </ref> missing for <ref> tag