Advice for Capitalists
- Although optimism is a good trait to have and leaders tend to be optimistic, misguided decisions often result from the hubris of optimism. We rely on only the information we have and neglect the surrounding uncertainty. On the other hand, extreme uncertainty can be paralyzing and it’s unacceptable to admit you are merely guessing. The main value of optimism is resilience in the face of setbacks.
- Kahneman suggests a pre mortem prior to an important decision. This is where you gather people familiar with the decision to write a brief history of how the proposed plan could turn out to be a disaster. If the plan survives, it is more likely to be a good one.
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Correction: December 18, 2011
A review on Nov. 27 about “Thinking, Fast and Slow” erroneously attributed a distinction to the book’s author, Daniel Kahneman, who won the Nobel in economic science in 2002. His being a psychologist was indeed unusual but did not make his award “unique in the history of the prize.” Another psychologist, Herbert A. Simon, won the award in 1978. (Simon, a polymath and interdisciplinarian, was also an economist, a political scientist and a sociologist.)
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