Behavioral Economics

In Daniel Kahneman’s influential book Thinking, Fast and Slow, he presents a compelling model of how our minds work: we have two distinct systems for thinking. System 1 operates automatically, quickly, with little effort and no sense of voluntary control. System 2 allocates attention to effortful mental activities, including complex computations and deliberate choice-making.

I remember when my first serious girlfriend broke up with me decades ago. Her chief complaint revolved around some recent incident, the details of which have faded from memory, but our conversation remains vivid. I pleaded with her, explaining how she was clouded by recency bias—focusing on the recent negative experience while overlooking all our positive history together.