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The Art of Thinking Clearly

The Art of Thinking Clearly

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Rolf Dobelli

First published in Great Britain in 2013 by Sceptre

An imprint of Hodder & Stoughton
An Hachette UK company

www.sceptrebooks.co.uk


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Book Details
 Price
 3.00
 Pages
 225 p
 File Size 
 1,002 KB
 File Type
 PDF format
 ISBN
 978 1 444 75955 6 (ebook) 
 Copyright©   
 Rolf Dobelli 2013 

About the Author
Rolf Dobelli, born 1966, is a Swiss writer, novelist and entrepreneur. He has an
MBA and a PhD in economic philosophy from the University of St. Gallen,
Switzerland. Dobelli is co-founder of getAbstract, the world`s leading provider of
book summaries. Most famously, he is author of THE ART OF THINKING
CLEARLY, which became an instant success and landed on the number 1 spot
on Germany`s official bestseller list and has been translated into many
languages. Dobelli is also founder and curator of ZURICH.MINDS, an invitationonly
community of the most distinguished thinkers, scientists and artists.

Introduction
In the fall of 2004, a European media mogul invited me to Munich to partake in
what was described as an ‘informal exchange of intellectuals’. I had never
considered myself an ‘intellectual’ – I had studied business, which made me quite
the opposite, really – but I had also written two literary novels and that, I guessed,
must have qualified me for such an invitation.
Nassim Nicholas Taleb was sitting at the table. At that time, he was an obscure
Wall Street trader with a penchant for philosophy. I was introduced to him as an
authority on the English and Scottish Enlightenment, particularly the philosophy
of David Hume. Obviously I had been mixed up with someone else. Stunned, I
nevertheless flashed a hesitant smile around the room and let the resulting
silence act as proof of my philosophical prowess. Straight away, Taleb pulled
over a free chair and patted the seat. I sat down. After a cursory exchange about
Hume, the conversation mercifully shifted to Wall Street. We marveled at the
systematic errors in decision making that CEOs and business leaders make –
ourselves included. We chatted about the fact that unexpected events seem much
more likely in retrospect. We chuckled about why it is that investors cannot part
with their shares when they drop below acquisition price.
Following the event, Taleb sent me pages from his manuscript, a gem of a
book, which I commented on and partly criticised. These went on to form part of
his international best-seller, The Black Swan. The book catapulted Taleb into the
intellectual all-star league. Meanwhile, my appetite whetted, I began to devour
books and articles written by cognitive and social scientists on topics such as
‘heuristics and biases’, and I also increased my email conversations with a large
number of researchers and started to visit their labs. By 2009, I had realised that,
alongside my job as a novelist, I had become a student of social and cognitive
psychology.
The failure to think clearly, or what experts call a ‘cognitive error’, is a
systematic deviation from logic – from optimal, rational, reasonable thought and
behaviour. By ‘systematic’ I mean that these are not just occasional errors in
judgement, but rather routine mistakes, barriers to logic we stumble over time and
again, repeating patterns through generations and through the centuries. For
example, it is much more common that we overestimate our knowledge than that
we underestimate it. Similarly, the danger of losing something stimulates us much
more than the prospect of making a similar gain. In the presence of other people
we tend to adjust our behaviour to theirs, not the opposite. Anecdotes make us
overlook the statistical distribution (base rate) behind it, not the other way round.
The errors we make follow the same pattern over and over again, piling up in one
specific, predictable corner like dirty laundry while the other corner remains
relatively clean (i.e. they pile up in the ‘overconfidence corner’, not the
‘underconfidence corner’).
To avoid frivolous gambles with the wealth I had accumulated over the course
of my literary career, I began to put together a list of these systematic cognitive
errors, complete with notes and personal anecdotes – with no intention of ever
publishing them. The list was originally designed to be used by me alone. Some
of these thinking errors have been known for centuries; others have been
discovered in the last few years. Some come with two or three names attached to
them. I chose the terms most widely used. Soon I realised that such a compilation
of pitfalls was not only useful for making investing decisions, but also for business
and personal matters. Once I had prepared the list, I felt calmer and more
clearheaded. I began to recognise my own errors sooner and was able to change
course before any lasting damage was done. And, for the first time in my life, I
was able to recognise when others might be in thrall to these very same
systematic errors. Armed with my list, I could now resist their pull – and perhaps
even gain an upper hand in my dealings. I now had categories, terms, and
explanations with which to ward off the spectre of irrationality. Since Benjamin
Franklin’s kite-flying days, thunder and lightning have not grown less frequent,
powerful or loud – but they have become less worrisome. This is exactly how I
feel about my own irrationality now.
Friends soon learned of my compendium and showed interest. This led to a
weekly newspaper column in Germany, Holland and Switzerland, countless
presentations (mostly to medical doctors, investors, board members, CEOs and
government officials) and eventually to this book.
Please keep in mind three things as you peruse these pages: first, the list of
fallacies in this book is not complete. Undoubtedly new ones will be discovered.
Second, the majority of these errors are related to one another. This should come
as no surprise. After all, all brain regions are linked. Neural projections travel from
region to region in the brain; no area functions independently. Third, I am
primarily a novelist and an entrepreneur, not a social scientist; I don’t have my
own lab where I can conduct experiments on cognitive errors, nor do I have a staff
of researchers I can dispatch to scout for behavioural errors. In writing this book, I
think of myself as a translator whose job is to interpret and synthesise what I’ve
read and learned – to put it in terms others can understand. My great respect goes
to the researchers who, in recent decades, have uncovered these behavioural
and cognitive errors. The success of this book is fundamentally a tribute to their
research. I am enormously indebted to them.
This is not a how-to book. You won’t find ‘seven steps to an error-free life’ here.
Cognitive errors are far too ingrained for us to be able to rid ourselves of them
completely. Silencing them would require superhuman willpower, but that isn’t
even a worthy goal. Not all cognitive errors are toxic, and some are even
necessary for leading a good life. Although this book may not hold the key to
happiness, at the very least it acts as insurance against too much self-induced
unhappiness.
Indeed, my wish is quite simple: if we could learn to recognise and evade the
biggest errors in thinking – in our private lives, at work or in government – we
might experience a leap in prosperity. We need no extra cunning, no new ideas,
no unnecessary gadgets, no frantic hyperactivity – all we need is less irrationality.


Table of Contents
Introduction
1 WHY YOU SHOULD VISIT CEMETERIES: Survivorship Bias
2 DOES HARVARD MAKE YOU SMARTER?: Swimmer’s Body Illusion
3 WHY YOU SEE SHAPES IN THE CLOUDS: Clustering Illusion
4 IF 50 MILLION PEOPLE SAY SOMETHING FOOLISH, IT IS STILL FOOLISH: Social Proof
5 WHY YOU SHOULD FORGET THE PAST: Sunk Cost Fallacy
6 DON’T ACCEPT FREE DRINKS: Reciprocity
7 BEWARE THE ‘SPECIAL CASE’: Confirmation Bias (Part 1)
8 MURDER YOUR DARLINGS: Confirmation Bias (Part 2)
9 DON’T BOW TO AUTHORITY: Authority Bias
10 LEAVE YOUR SUPERMODEL FRIENDS AT HOME: Contrast Effect
11 WHY WE PREFER A WRONG MAP TO NO MAP AT ALL: Availability Bias
12 WHY ‘NO PAIN, NO GAIN’ SHOULD SET ALARM BELLS RINGING: The It’ll-
Get-Worse-Before-It-Gets-Better Fallacy
13 EVEN TRUE STORIES ARE FAIRYTALES: Story Bias
14 WHY YOU SHOULD KEEP A DIARY: Hindsight Bias
15 WHY YOU SYSTEMATICALLY OVERESTIMATE YOUR KNOWLEDGE
AND ABILITIES: Overconfidence Effect
16 DON’T TAKE NEWS ANCHORS SERIOUSLY: Chauffeur Knowledge
17 YOU CONTROL LESS THAN YOU THINK: Illusion of Control
18 NEVER PAY YOUR LAWYER BY THE HOUR: Incentive Super-Response Tendency
19 THE DUBIOUS EFFICACY OF DOCTORS, CONSULTANTS AND
PSYCHOTHERAPISTS: Regression to Mean
20 NEVER JUDGE A DECISION BY ITS OUTCOME: Outcome Bias
21 LESS IS MORE: The Paradox of Choice
22 YOU LIKE ME, YOU REALLY REALLY LIKE ME: Liking Bias
23 DON’T CLING TO THINGS: Endowment Effect
24 THE INEVITABILITY OF UNLIKELY Events: Coincidence
25 THE CALAMITY OF CONFORMITY: Groupthink
26 WHY YOU’LL SOON BE PLAYING MEGATRILLIONS: Neglect of Probability
27 WHY THE LAST COOKIE IN THE JAR MAKES YOUR MOUTH WATER: Scarcity Error
28 WHEN YOU HEAR HOOFBEATS, DON’T EXPECT A ZEBRA: Base-Rate Neglect
29 WHY THE ‘BALANCING FORCE OF THE UNIVERSE’ IS BALONEY: Gambler’s Fallacy
30 WHY THE WHEEL OF FORTUNE MAKES OUR HEADS SPIN: The Anchor
31 HOW TO RELIEVE PEOPLE OF THEIR MILLIONS: Induction
32 WHY EVIL STRIKES HARDER THAN GOOD: Loss Aversion
33 WHY TEAMS ARE LAZY: Social Loafing
34 STUMPED BY A SHEET OF PAPER: Exponential Growth
35 CURB YOUR ENTHUSIASM: Winner’s Curse
36 NEVER ASK A WRITER IF THE NOVEL IS AUTOBIOGRAPHICAL:
Fundamental Attribution Error
37 WHY YOU SHOULDN’T BELIEVE IN THE STORK: False Causality
38 EVERYONE IS BEAUTIFUL AT THE TOP: Halo Effect
39 CONGRATULATIONS! YOU’VE WON RUSSIAN ROULETTE: Alternative Paths
40 FALSE PROPHETS: Forecast Illusion
41 THE DECEPTION OF SPECIFIC CASES: Conjunction Fallacy
42 IT’S NOT WHAT YOU SAY, BUT HOW YOU SAY IT: Framing
43 WHY WATCHING AND WAITING IS TORTURE: Action Bias
44 WHY YOU ARE EITHER THE SOLUTION – OR THE PROBLEM: Omission Bias
45 DON’T BLAME ME: Self-Serving Bias
46 BE CAREFUL WHAT YOU WISH FOR: Hedonic Treadmill
47 DO NOT MARVEL AT YOUR EXISTENCE: Self-Selection Bias
48 WHY EXPERIENCE CAN DAMAGE OUR JUDGEMENT: Association Bias
49 BE WARY WHEN THINGS GET OFF TO A GREAT START: Beginner’s Luck
50 SWEET LITTLE LIES: Cognitive Dissonance
51 LIVE EACH DAY AS IF IT WERE YOUR LAST – BUT ONLY ON SUNDAYS:
Hyperbolic Discounting
52 ANY LAME EXCUSE: ‘Because’ Justification
53 DECIDE BETTER – DECIDE LESS: Decision Fatigue
54 WOULD YOU WEAR HITLER’S SWEATER?: Contagion Bias
55 WHY THERE IS NO SUCH THING AS AN AVERAGE WAR: The Problem
with Averages
56 HOW BONUSES DESTROY MOTIVATION: Motivation Crowding
57 IF YOU HAVE NOTHING TO SAY, SAY NOTHING: Twaddle Tendency
58 HOW TO INCREASE THE AVERAGE IQ OF TWO STATES: Will Rogers
Phenomenon
59 IF YOU HAVE AN ENEMY, GIVE HIM INFORMATION: Information Bias
60 HURTS SO GOOD: Effort Justification
61 WHY SMALL THINGS LOOM LARGE: The Law of Small Numbers
62 HANDLE WITH CARE: Expectations
63 SPEED TRAPS AHEAD!: Simple Logic
64 HOW TO EXPOSE A CHARLATAN: Forer Effect
65 VOLUNTEER WORK IS FOR THE BIRDS: Volunteer’s Folly
66 WHY YOU ARE A SLAVE TO YOUR EMOTIONS: Affect Heuristic
67 BE YOUR OWN HERETIC: Introspection Illusion
68 WHY YOU SHOULD SET FIRE TO YOUR SHIPS: Inability to Close Doors
69 DISREGARD THE BRAND NEW: Neomania
70 WHY PROPAGANDA WORKS: Sleeper Effect
71 WHY IT’S NEVER JUST A TWO-HORSE RACE: Alternative Blindness
72 WHY WE TAKE AIM AT YOUNG GUNS: Social Comparison Bias
73 WHY FIRST IMPRESSIONS DECEIVE: Primacy and Recency Effects
74 WHY YOU CAN’T BEAT HOME-MADE: Not-Invented-Here Syndrome
75 HOW TO PROFIT FROM THE IMPLAUSIBLE: The Black Swan
76 KNOWLEDGE IS NON-TRANSFERABLE: Domain Dependence
77 THE MYTH OF LIKE-MINDEDNESS: False-Consensus Effect
78 YOU WERE RIGHT ALL ALONG: Falsification of History
79 WHY YOU IDENTIFY WITH YOUR FOOTBALL TEAM: In-Group Out-Group
Bias
80 THE DIFFERENCE BETWEEN RISK AND UNCERTAINTY: Ambiguity
Aversion
81 WHY YOU GO WITH THE STATUS QUO: Default Effect
82 WHY ‘LAST CHANCES’ MAKE US PANIC: Fear of Regret
83 HOW EYE-CATCHING DETAILS RENDER US BLIND: Salience Effect
84 WHY MONEY IS NOT NAKED: House-Money Effect
85 WHY NEW YEAR’S RESOLUTIONS DON’T WORK: Procrastination
86 BUILD YOUR OWN CASTLE: Envy
87 WHY YOU PREFER NOVELS TO STATISTICS: Personification
88 YOU HAVE NO IDEA WHAT YOU ARE OVERLOOKING: Illusion of Attention
89 HOT AIR: Strategic Misrepresentation
90 WHERE’S THE OFF SWITCH?: Overthinking
91 WHY YOU TAKE ON TOO MUCH: Planning Fallacy
92 THOSE WIELDING HAMMERS SEE ONLY NAILS: Deformation
Professionnelle
93 MISSION ACCOMPLISHED: Zeigarnik Effect
94 THE BOAT MATTERS MORE THAN THE ROWING: Illusion of Skill
95 WHY CHECKLISTS DECEIVE YOU: Feature-Positive Effect
96 DRAWING THE BULL’S-EYE AROUND THE ARROW: Cherry-picking
97 THE STONE-AGE HUNT FOR SCAPEGOATS: Fallacy of the Single Cause
98 SPEED DEMONS MAKE SAFE DRIVERS: Intention-To-Treat Error
99 WHY YOU SHOULDN’T READ THE NEWS: News Illusion
Epilogue
Acknowledgments
Author Biography
A Note on Sources


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A NOTE ON SOURCES
Hundreds of studies have been conducted on the vast majority of cognitive and
behavioural errors. The knowledge encompassed in this book is based on the
research carried out in the fields of cognitive and social psychology over the past
three decades. For full references, as well as recommendations for further
reading and comments, visit www.sceptrebooks.co.uk/AOTC.

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