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Kahneman TFaS Intro v3

Kahneman TFaS Intro v3

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Published by David Sherr
Thinking, Fast and Slow: Introduction to the book and essay series.
Thinking, Fast and Slow: Introduction to the book and essay series.

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Published by: David Sherr on Nov 22, 2011
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03/14/2013

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On Daniel Kahneman, Systems of Thinking and Knowledge Sharing
Introduction
© Copyright 2011 David M. Sherrdavid@NewGlobalEnterprises.Net11/14/11-1
Preface
After Keynes and
The Economic Consequences of Peace
, I have become a great fan of two Nobel Laureates inEconomics: Ronald Henry Coase (awarded 1991) and Daniel Kahneman (awarded in 2002). Coase in a 1994publication,
Essays on Economics and Economists,
gave me the foundation for understanding the economicsof services and the picoeconomic transactions of the Internet.It was
Das Kapital 
of Marx that first informedme of the nature of commodities as the source of great wealth. When teaching a course in DataCommunications to graduate students in 1996, it all came together for me that the Internet would be thelocale of new wealth building though services as commodities. Indeed, we are seeing this come to passtoday with the advent, acceptance and availability of Mobile Access and Cloud Computing.
But I wasn’t satisfied that the Adam Smith’s
Rational Man of 
Wealth of Nations
really operated all the time.Marx gave me Greedy Man, Smith, Rational Man, and Coase, Efficient Man. But there was still thatconfounding
aspect of irrational and unpredictable actions when Greed, Rationality or Efficiency didn’t
explain economic actions. Kahneman gave me Fallible Man.Daniel Kahneman received his prize for addressing the irrational side of economics and other decisionmaking processes. The ideas are principally in his 1974
Science
article with Amos Tversky,
Judgment underUncertainty: Heuristics and Biases.
I was an
avid reader of 
Science
 
in the 60’s and 70’s
and this articlecaught my attention. Into extreme rationality at the time and subject to his principle fallacy of overconfidence in what I knew, I thought it to be interesting, but not critical knowledge. Fortunately, it laydormant, not dead, in my consciousness for almost 30 years until 1999-2004 considering how to integratetechnology into solutions to support the retail marketing and selling of financial services.Marketing is the ultimate applied behavioral science. It was Larry Huston in R&D at Proctor and Gamble,who enlightened me on the Brand Cycle at a November 2000 Wharton Conference. Below is a picture of what he taught me (it is annotated with my current work on Metrics Tabloids which I will address later inessays on Knowledge Distribution):
 
On Daniel Kahneman, Systems of Thinking and Knowledge Sharing
Introduction
© Copyright 2011 David M. Sherrdavid@NewGlobalEnterprises.Net11/14/11-2The above Brand Cycle separates the Experiences of Usage (how did it look, sound, feel, smell, taste) andMemory Reconstruction (what I remember about the experience of use).This brings us to a February 2010 TED lecture by Kahneman on the psychology of that separation (viewed byme in July 2011):http://www.ted.com/talks/daniel_kahneman_the_riddle_of_experience_vs_memory.html In 20 captivating minutes,
Kahneman discusses the “riddle” of why the experience is different from the
memory of the experience. He tied it to a 2009 study of the relationship of Income and Happiness in the US.This study showed a direct relationship between Happiness and Income up to about $65,000 per year. Atthat point, the line flattens. I contend this turning is the point when greed exceeds need. But that is a topicfor another time with multiple bourbons.In September 2011, I was conversing on money in Google+ with a good friend and colleague of 10 years,Mark Raaberg. He pointed me to an article by British anthropologist and political economist David Graeberon debt and how money does not necessarily emerge from barter economies:http://www.nakedcapitalism.com/2011/09/david-graeber-on-the-invention-of-money-%E2%80%93-notes-on-sex-adventure-monomaniacal-sociopathy-and-the-true-function-of-economics.html This led me directly to order
Graeber’s then
forthcoming book,
Debt, The First 5,000 Years,
from Amazon. Intheir omniscience, Amazon suggested that I might also like
Thinking, Fast and Slow 
, Farrar, Strauss, Giroux,NYC 2011 by Daniel Kahneman. Somehow Amazon knows I like Economics (duh!) and that another thenforthcoming book by no less than a Nobel Laureate would interest me. (Perhaps they also had my Webinteractions with TED.com
last summer when I watched Kahneman’s talk described above.
) Additionally, Isaved on shipping and received a pre-order discount if I bought both. As a crypto-Luddite, I love hardcoverbooks. And so I did. They both arrived end of October presenting the decision, which to read first?I choose to read Kahneman first because his subject matter should be useful in a current corporateconsulting engagement where I am helping create architecture and implementing technology for knowledgesharing. With knowledge sharing, the concept of Expert is central. A key question is who is an Expert?Second, how are they found? On a tertiary, but most important note, how is Expertise demonstrated?In a Nov 5, 2011 review in the
Financial Times
by William Easterly, Dept of Economics NYU(http://www.ft.com/cms/s/2/15bb6522-04ac-11e1-91d9-00144feabdc0.html#axzz1dRgbQiTe)he opens with briefly,
declaring “There are many books on human rationality and irrationality, but only onemasterpiece. That masterpiece is Daniel Kahneman’s,
Thinking, Fast and Slow 
.
 
 
On Daniel Kahneman, Systems of Thinking and Knowledge Sharing
Introduction
© Copyright 2011 David M. Sherrdavid@NewGlobalEnterprises.Net11/14/11-3And later in his review confirming its importance to Knowledge Sharing, Professor Easterly continues:
 
[Kah
neman’s and Tversky’s
] answer is that
expertise
can be learnt by prolonged exposure to
situations that are “
sufficiently regular to be predictable
”, and in which the expert gets quick and
decisive feedback on whether he did the right or the wrong thing. Experts can thus train their
unconscious “
 pattern recognition
” mechanism to produce the right answer quickly.”
(
Emphasisadded 
)
 Approach
This is the first of 42 essays covering the sections of 
Thinking, Fast and Slow (TF&S
as I will refer to ithenceforth): Introduction, Parts I-V/38 Chapters, Conclusions and two Appendices. Each essay will beginwith a summary of the
TF&S
section. Focus will then be on (1) a summary of Kahneman
s points, and,(2) the applicability to knowledge sharing in a corporate setting.Perhaps these 42 sections of 
TF&S
 
are Kahneman’s
detailed answer to the ultimate question of 
Life, theUniverse and Everything
of Douglas Adams
classic sci-fi book. The ultimate question is still outstanding,Earth having incorrectly
computed the Question: “
Wh
at is 8 X 7?”
 
I leave the general applicability of the knowledge contained in Kahneman’s work to him and others far
more capable and/or in possession of far more time than I.In reading Kahneman, there are many phrases and ideas that resonate strongly with this topic of Knowledge S
haring. I only hope that these essays can bring to the topic some “enriched vocabulary” as
Professor Kahneman explains his aspirations in the Introduction of 
TF&S
.Typically, I set a time limit for my efforts (time-boxing in business jargon). This is no exception. My goal
is to finish by New Year’s Day 2012.
As you can see this will average out to about one per day betweennow (11/17/11) and the New Year (6 weeks: 44 days with slack of 2 days, holidays and all. Wish meluck!)Alas, one week later after the first draft of this essay, as of November 20, 2011, I have produced twoessays
this and the one to follow. This chosen task will take me 18 not 6 weeks per paper at this rate
of “write one day, edit two days” until mid
-February 2012. Silly of me for not remembering the systemis never usable until version 3.1. See how tripling the time (and doubling the money) of our gut estimateseems to hold true at this moment.One week of experience has provided much better information about my production rate, not capacity,in my producing two essays. Some future essay will include an update on this production rate. Thinkingabout it, it should become more or less automatically reported.The Calendar will objectively judge my finishing this Knowledge Sharing Quest by the chosen updateddeadline.You be the judge of whether your vocabulary is enriched by these ideas.

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