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95 of 97 people found the following review helpful:
4.0 out of 5 stars
Think Twice Because Your Habits and Mind Tend Not To Let You, September 27, 2009
This review is from: Think Twice: Harnessing the Power of Counterintuition (Hardcover)
Over the millennia, our brains have been developed to be the most energy conserving part of our bodies due, in part, that our distant forefathers had to make quick decisions of friend or foe. Therefore, we rarely take time, and energy, to think or rethink things over. If one does not spend a little extra time to think thru your important decisions, you tend to be on "Thin Ice". For example, take another look at the title of the book, did you notice the graphical cryptogram ?!
This book is about mistakes and bad decisions of smart people, business executives, doctors, and others. Many of the reasons all these people and professions make bad decisions, in part, is that we all have a similar framework of having the same mental software basics. This can and does lead to false beliefs and bad decisions due to mental traps as the author describes. These default false beliefs that we all have inherited prevent clear thinking. As the author continues to describe throughout the book, "To make good decisions, you frequently must think twice - and that is something our minds would rather not do."
The book is a nice enjoyable read, very clear with the necessary psychology jargon, and has a very nice set of notes to follow-up on if you would like. All in, though short, this book comes highly recommended for any bookshelf on how to make better decisions.
As a side note: I have pointed out in other reviews, of other books below, that are in the same genre and which are some of my favorites. So if you like this somewhat introductory book, then you may be interested in more hidden traps our minds fall into, or other social influences, I provide the following recommendations: Influence: The Psychology of Persuasion (polymath classic), How We Know What Isn't So (very good), Mean Markets and Lizard Brains (Hidden Gem), The Psychology of Judgment & Decision Making (Classic), and Poor Charlie's Almanack (Charlie's Insights). Good reading and enjoy :)
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45 of 45 people found the following review helpful:
5.0 out of 5 stars
Upgrade your decision making process, January 10, 2010
This review is from: Think Twice: Harnessing the Power of Counterintuition (Hardcover)
Think Twice represents the next step in Mauboussin's beneficial quest to help all of us identify the mistakes we make and provide the tools to fix them. It takes many of Mauboussin's past ideas, condenses a vast array of additional sources, and puts them in a manifesto on how to dodge the pitfalls of poor decision making. Mauboussin has managed to write a book that is interesting for everyone. Deceptively short at 143 pages (with 33 pages of notes and references), I recommend readers slow their pace to digest this book and internalize the tools and countless real world examples used to clarify and illustrate.
"No one wakes up thinking, "I am going to make bad decisions today." Yet we all make them." Think Twice outlines eight common mistakes, tries to help the reader recognize these in context, then provide ideas on how to mitigate your own tendency to repeat these same mistakes. Certain ideas recur throughout the text, including using data and models to inform decisions; viewing many real world situations as complex adaptive systems; as well as appreciating context and luck.
Each chapter focuses on one key error we make:
+Chapter 1: Viewing our problem as unique. Others have usually faced the same decisions we face and we can learn from their results to get to the right answer - for example in corporate M&A, you can look at how other similar deals have performed.
+Chapter 2: We fail to consider enough alternative options under pressure because we have models in our head that oversimplify the world; usually that helps us make quick decisions but often it causes us to leave out alternative choices which could be better. Incentives and unconscious anchoring on irrelevant information contribute to this tunnel vision.
+Chapter 3: An uncritical reliance on experts. Experts are people like us and are subject to all the same bias and error. While this has been covered by Cialdini and others, Mauboussin focuses on the solution - "computers and collectives remain underutilized guides for decision making." We see this idea now in practice in the development of prediction markets for Hollywood movies to who will be the next Senator from North Dakota.
+Chapter 4: "Situation influences our decisions enormously." We all underestimate how much we are influenced not only by others, but by our own feelings.
+Chapter 5: Cause and effect reasoning fails when systems are complex because the whole is greater than the sum of the parts. Focusing on why individuals in a system do something - an investor in the market, an ant in a colony, or birds in a flock - does not help explain how the entire system performs. Understand the rules that govern the entire system, rather than the rules that drive the individual participants.
+Chapter 6: We try to apply general rules in contexts that are not appropriate. In real life, decisions are specific. As Mauboussin says, "it depends".
+Chapter 7: Small changes in a system (or an input) can lead to a large change in output. We mess things up by assuming the same input will always have the same output. One quotation I particularly liked in this chapter was from Peter Bernstein - "Consequences are more important than probabilities."
+Chapter 8: We forget about reversion to the mean. "Any system that combines skill and luck will revert to the mean over time." Ignoring this makes people think they are special and that the rules of probability don't apply to them. This is reinforced by the "halo effect" - when someone is doing well in any field, people and the press lionize that individual and report on the multitude of genius they have ...but when they revert to the mean, all of a sudden that same person is viewed as incompetent. Mauboussin's own colleague Bill Miller faced this same perception cycle, and emerged with a halo in 2009.
Mauboussin concludes the book by summarizing an effective action plan - to put it simply, Mauboussin admonishes us to Think Twice before we make a serious decision to ensure we don't fall victim to any of these pernicious errors.
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22 of 24 people found the following review helpful:
5.0 out of 5 stars
Mauboussin Does It Again!, October 14, 2009
This review is from: Think Twice: Harnessing the Power of Counterintuition (Hardcover)
Michael Mauboussin has done it again, as the Chief Investment Strategist at Legg Mason Capital Management and professor at Columbia Business School is out with a provocative and page-turning book about how to improve your decision making. Mauboussin's Expectations Investing focused more on the nuts and bolts of investing, while Think Twice's precursor, More Than You Know, explored psychology, strategy and the science of money management. The latest work, Think Twice, delves into how to actually improve decision making and even exploit the behavioral pitfalls that others may fall into. Mauboussin's experience within the field of behavioral finance becomes immediately obvious when reading this book, and Mauboussin serves as a unique guide for readers looking both to improve their thinking process in a practical way and gain a more holistic picture of how their mind works.
As a reader, I found the book to be engaging and entertaining, with stories serving to make the relevant behavioral points. I flew through the book and decided I needed to read it again. I now feel like I have a greater awareness of how I think and the all-too-common errors in judgment I might make without due consideration. The key for me has been to make sure I am aware of when I am in the crosshairs and could potentially make a sub-optimal decision. I then make sure I slow down and apply some of the lessons from the book in the hopes of making a better decision. No matter what I always try to make sure I am aware of what factors are leading me to make the decision I am making so that I can ultimately analyze what might have made me do a particular thing on a particular day. I view such a project as an effort to improve one's decision-making process, for the long term. This book provides a framework for such an undertaking and does so in an easily understandable and pragmatic way.
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