Chapter

Decision Making

Robert G. Hagstrom

in Investing

Published by Columbia University Press

Published in print January 2013 | ISBN: 9780231160100
Published online November 2015 | e-ISBN: 9780231531016 | DOI: https://dx.doi.org/10.7312/columbia/9780231160100.003.0009
Decision Making

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This chapter discusses the importance of decision making in the art and science of investing. It begins by looking at Shane Frederick's research on cognitive reasoning, and in particular how readily people could override the brain's reflexive decision-making center—what is commonly called intuition. For years, psychologists have been interested in the idea that our cognitive processes are divided into two modes of thinking, traditionally referred to as intuition and reason. Today, these cognitive systems are known as System 1 and System 2. The chapter then examines Daniel Kahneman's ideas...

Keywords: decision making; investing; Shane Frederick; cognitive reasoning; intuition; Daniel Kahneman; latticework of mental models; Charlie Munger; worldly wisdom; finance

Chapter.  7011 words. 

Subjects: Financial Markets

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