The Law of Small Numbers

• Samples from smaller populations will yield extreme results more often than samples from larger populations. This means that the results of large samples deserve more trust than smaller samples. This explains why small schools are more likely to have high scores. Truth is, small schools are just more variable. System 1, in general, is very poor at statistical thinking. People generally are not sensitive to sample size. We are pattern seekers, but we tend to see patterns in randomness where they don’t exist.

Frames and Availability

• Chapter 11: Here Daniel gives a number of examples of how our decisions are influenced by the introduction of information that frames our thinking. Even real estate professionals will judge a house to be more valuable if it has a higher listing price. Both systems are influenced by anchors.
• Chapter 12: If examples of an event come easily to mind, you are likely to exaggerate its frequency. A dramatic event such as a plane crash will alter your feelings about the safety of flying. Ease of retrieval is more important than the number you recall as the last ones recalled require greater effort. Both systems can be involved in this but System 1 is more likely to be biased by the availability of examples. This happens more often if System 2 is busy and in people who are happy, powerful, novices, and have high faith in their intuition.

Emotions Over Facts

• Chapter 13: Our expectations about the frequency of events are distorted by the prevalence and emotional intensity of the messages to which we are exposed. You know your emotions and use them to make decisions over facts you may not know. Such availability biases often flow into public policy. The media can be responsible for availability cascades.

We Ignore Base Rates

• Chapter 14: System 1 doesn’t consider the base rate when assessing probabilities. You might guess a person’s occupation from his personality without any regard to the fraction of the population with that occupation. You might guess a person reading the NY Times on the subway has a PhD rather than a high school diploma even though the probability of any one person having a PhD is very low.
• Chapter 15: Less is More: When you specify a possible event in greater detail you can only lower its probability. This can set up a conflict between System 1’s assessment of plausibility and System 2’s assessment of probability. When you uncritically substitute plausibility for probability, it can impair your judgment.

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