Kahnemann - Thinking Fast And Slow

Question 1

System I vs. System II

Answer 1

I - automatically, no effort, cant be switched off

II - effortfull, get conscious about things, demanding, depletion effect

Question 2

Prospect theory

Answer 2

Influence of reference point on human decision making.
Only relative comparison between choices, no absolute value.
Difference to utility theory (Bernoulli’s error)
=> utility rating of people is individual (rich person doesn’t care about 1mio as much as poor person) -> different reference point

Question 3

Loss aversion

Answer 3

• losses have a higher psychological values than gains
• people don’t want to loose -> become risk seeking to avoid looses
• people don’t care as much about gains -> become risk averse and prefer the status quo