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Daniel Kahneman: Algorithms Make Better Decisions Than You

Jul 22, 2025 1h 12m 17 insights
Daniel Kahneman won the Nobel Prize for proving we're not as rational as we think. In this timeless conversation we discuss how to think clearly in a world full of noise, the invisible forces that cloud our judgement, and why more information doesn't equal better thinking. Kahneman also reveals the mental model he discovered at 22 that still guides elite teams today.  Approximate timestamps:
Actionable Insights

1. Delay Intuition for Decisions

Don’t try to form an intuition quickly; instead, focus on separate points and gather the whole profile before forming an intuition. This approach ensures more information is considered, leading to better, less rapid intuitive judgments.

2. Never Say Yes Immediately

Adopt the rule of never saying ‘yes’ to requests immediately on the phone, instead stating ‘I’ll get back to you tomorrow.’ This provides crucial time to think and avoid intuitive commitments you might later regret, effectively reprogramming your unconscious mind.

3. Make Good Behavior Easier

To change behavior, focus on making desired actions easier and undesirable actions harder, rather than simply pushing for change. This involves identifying and weakening ‘restraining forces’ that prevent the desired behavior, leading to less tension in the system.

4. Understand Situational Behavior

When people behave in strange or unexpected ways, look at the situation and the pressures within it that might be influencing their actions, rather than attributing it solely to personality. This fosters empathy and reduces judgmental attitudes by recognizing the powerful role of context.

5. Use Algorithms for Decisions

Whenever possible, replace human judgments with rules and algorithms, especially in organizational decision-making. Algorithms tend to make better decisions because they lack sunk costs and emotions, leading to more rational and consistent outcomes.

6. Conduct a Pre-Mortem Exercise

Before making a significant decision, gather the decision-making group and ask them to imagine it’s two years later and the decision was a disaster. Then, have each person write down the history of that disaster in bullet points to legitimize dissent and uncover potential flaws.

7. Protect Dissenters in Groups

As a leader of a decision-making group, actively protect and encourage dissenters, making it as painless as possible for them to voice doubts or opposing views. This ensures valuable disconfirming evidence is surfaced and considered, improving overall decision quality.

8. Write Decisions Before Discussion

Before a group discussion on a topic, have participants independently write down their preferred decision or position. This promotes better preparation and ensures a broader diversity of initial viewpoints, preventing premature convergence of opinions.

9. Track Decisions and Outcomes

For continuous personal or organizational learning, consistently keep a record of decisions made and how they ultimately turned out. This allows for later evaluation of procedures and identification of patterns in successful or unsuccessful judgments.

10. Negotiate to Understand Others

Approach negotiations by prioritizing understanding the other party’s perspective and motivations rather than trying to convince them. This non-intuitive approach helps identify what can make it easier for them to move towards your position, leading to better outcomes.

11. Resist Negotiation Anchors

Be aware that the first number mentioned in a negotiation acts as an anchor, influencing subsequent perceptions of plausible prices. If an absurd number is presented, actively resist it by making a scene or refusing to start the conversation from that number.

12. Moderate Extreme Predictions

Recognize that intuitive predictions are often too extreme and do not account for regression to the mean; the best guess is always less extreme than your initial impression. Consciously moderate your predictions, understanding that statistical outcomes are less extreme than initial impressions.

13. Structure Meetings with Scores

For complex decisions, have staff prepare briefing books where each chapter ends with an independent score (mediating assessment) on its impact on the decision. Then, structure board meetings to discuss these scores one at a time, forcing a focus on evidence before a global judgment.

14. Train on Judgment Scales

To reduce ’noise’ or useless variability in judgments, train people on how to use measurement scales consistently. This involves comparing cases to other cases and sharing a common frame of reference, which is crucial in fields like performance evaluation or underwriting.

15. Be Less Judgmental

Cultivate a less judgmental mindset by understanding that motivation is complex, and people do good or bad things for a mixture of reasons, not solely due to personality. This perspective encourages more empathy and patience in interactions.

16. Exercise Daily for Consistency

Consider exercising every day, as the host found it easier to maintain than exercising only three times a week. The specific activity, duration, and scope can change, but the commitment to working out remains constant.

17. Avoid Emotional Decision-Making

Recognize that strong emotions, distraction, and noisy environments impair clear thinking and decision-making. Therefore, allow things to settle down and cool down, or seek a more conducive environment before making important decisions.