Psychologist and 2002 Nobel prize winner Daniel Kahneman has published a book on human rationality and decision-making that reminds me of another book by another Nobel winner, Herbert Simon, who won the prize in 1978. Kahneman's book is called Thinking, Fast and Slow. Simon's book is called Models of Man. Interestingly, both Kahneman and Simon are psychologists who won the Nobel for Economics.

Where Simon coined phrases like "bounded rationality" and "satisficing" to talk about our thinking, Kahneman introduces us to System 1, System 2 and "the law of least effort." System 1 is the quick, reflexive, effortless, unconscious and intuitive thinking we employ to solve routine problems. Malcolm Gladwell called it the "thin slicing" or "blink" method of "thinking without thinking" in his book Blink. System 2 is the slow, labored, effortful conscious and rational thinking we employ to solve more complex and unfamiliar challenges.

When I toss a ball to you, you don't need to think about it in order to catch it. System 1 "heuristics," or rules of thumb, guide your automatic response. Unless it's the the first time anyone has ever tossed you a ball! In that case, System 2 will rule, and you'll drop the ball. You have to think about it at first, and deliberately and consciously try to catch it until you "get it" and your brain forms a heuristic, enabling System 1 to work.

Here's the thing, and Kahneman's main point: System 2 should be the one that prevents sloppy decisions and bad judgments, the one that keeps us out of trouble…but it's lazy. It wants to act like System 1.

"A general 'law of least effort' applies to cognitive as well as physical exertion, writes Kahneman. "The law asserts that if there are several ways of achieving the same goal, people will eventually gravitate to the least demanding course of action. In the economy of action, effort is a cost, and the acquisition of skill is driven by the balance of benefits and costs. Laziness is built deep into our nature."

Herbert Simon termed this "satisficing," combining satisfy and suffice. By nature we settle for “good enough,” opting for whatever seems to expeditiously meet the minimum requirement needed to move us closer to achieving a given goal. We then stop looking for other ways, including the best way, to solve the problem. We rationalize that the optimal solution is too difficult, not worth the effort involved, or simply unnecessary.

My favorite example of this phenomenon is not found in either Kahneman's nor Simon's book. Take a look at the incorrect Roman-numeral equation below. Imagine that the numbers are movable sticks. Treating the plus and equals signs as unmoveable, what is the least number of sticks you need to move to turn the equation into a correct one?

XI + I = X

Most people get to the answer of “one” almost immediately. They jump in and start moving things around right away, seeing X + I = XI or IX + I = X as good answers, and stop at that point. But these are satisficing answers, and only “good enough.”

If you stop and think for a moment about the optimal answer to the question of “least number of sticks moved,” you realize that the answer ideally would be “zero.” Is that possible? Yes. Turn the image upside down for a moment. Or reflect it in a mirror. You don’t need to move a single stick. The elegant solution is achievable only through Kahneman's System 2, but System 1 jumps in and trumps it…to our detriment.

Now, the interplay between System 1 and System 2, which forms the central dramatic tension in Thinking, Fast and Slow, is not about intelligence. Kahneman's version of the Roman numeral exercise is illustrated in what he refers to as "the Linda problem," which he treats us to 156 pages into the book. Kahneman and his late research partner, Amos Tversky, conducted an experiment in the late 1980s in which they made up a fictitious person, whom they called "Linda":

Linda is thirty-one years old, single, outspoken, and very bright. She majored in philosophy. As as student, she was deeply concerned with issues of discrimination and social justice, and also participated in antinuclear demonstrations.

Participants were given this short description, then asked a single question: Which alternative is more probable?

1. Linda is a bank teller.

or

2. Linda is a bank teller and is active in the feminist movement.

85% of Stanford Graduate Business School students--all of whom had taken several advanced courses in probability, statistics, and decision theory--along with "about 85% to 90% of undergraduates at several major universities," chose Number 2! Think about it: Every feminist bank teller is a bank teller! Picking Number 2 Nearly violates the basic laws of logic, not to mention probability. Yet nearly everyone failed. The intuitive System 1 again trumped the lazy System 2.

The question in my mind throughout Thinking, Fast and Slow was this: what can we do to improve the System 1 vs. System 2 dynamic?

Kahneman advises us that "The best we can do is a compromise: learn to recognize situations in which mistakes are likely and try harder to avoid significant mistakes when the stakes are high. The premise of this book is that it is easier to recognize other people’s mistakes than our own."

So true! Although Thinking, Fast and Slow is well over 400 pages, I enjoyed it all the way through. If you decide to buy and read this book, avoid the e-reader version, because several areas of the printed book have formatting that doesn't translate well to other formats.

Thinking, Fast and Slow is the perfect last-minute holiday gift.