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The Undoing Project: A Friendship That Changed Our Minds Hardcover – December 6, 2016
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How a Nobel Prize–winning theory of the mind altered our perception of reality.
Forty years ago, Israeli psychologists Daniel Kahneman and Amos Tversky wrote a series of breathtakingly original studies undoing our assumptions about the decision-making process. Their papers showed the ways in which the human mind erred, systematically, when forced to make judgments in uncertain situations. Their work created the field of behavioral economics, revolutionized Big Data studies, advanced evidence-based medicine, led to a new approach to government regulation, and made much of Michael Lewis’s own work possible. Kahneman and Tversky are more responsible than anybody for the powerful trend to mistrust human intuition and defer to algorithms.
The Undoing Project is about a compelling collaboration between two men who have the dimensions of great literary figures. They became heroes in the university and on the battlefield―both had important careers in the Israeli military―and their research was deeply linked to their extraordinary life experiences. Amos Tversky was a brilliant, self-confident warrior and extrovert, the center of rapt attention in any room; Kahneman, a fugitive from the Nazis in his childhood, was an introvert whose questing self-doubt was the seedbed of his ideas. They became one of the greatest partnerships in the history of science, working together so closely that they couldn’t remember whose brain originated which ideas, or who should claim credit. They flipped a coin to decide the lead authorship on the first paper they wrote, and simply alternated thereafter.
This story about the workings of the human mind is explored through the personalities of two fascinating individuals so fundamentally different from each other that they seem unlikely friends or colleagues. In the process they may well have changed, for good, mankind’s view of its own mind.
- Print length368 pages
- LanguageEnglish
- PublisherW. W. Norton & Company
- Publication dateDecember 6, 2016
- Dimensions9.3 x 6 x 1.3 inches
- ISBN-100393254593
- ISBN-13978-0393254594
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Editorial Reviews
Review
― Jennifer Senior, New York Times
"Lewis is the ideal teller of [Tversky and Kahneman’s] story… You see his protagonists in three dimensions―deeply likable, but also flawed, just like most of your friends and family."
― David Leonhardt, New York Times Book Review
"Fascinating stories about intriguing people."
― Cass Sunstein and Richard Thaler, The New Yorker
"Brilliant… Lewis has given us a spectacular account of two great men who faced up to uncertainty and the limits of human reason."
― William Easterly, Wall Street Journal
"Compelling… The Undoing Project is a history of the birth of behavioral economics, but it’s also Lewis’s testament to the power of collaboration."
― Peter Coy, Bloomberg Businessweek
"Intellectually mesmerizing and inspiring."
― Harper's Bazaar
"Mind-blowing… [The Undoing Project] will raise doubts about how you personally perceive reality."
― Don Oldenburg, USA Today
"Michael Lewis has a genius for finding stories about people who view reality from an unusual angle and telling these stories in a compulsively readable way."
― Geoffrey Kabat, Forbes
"A fantastic read."
― Jesse Singal, New York Magazine
"Lewis [is a] master of the character-driven narrative."
― Charlie Gofen, The National Book Review
"Tantalizing and tender… Lewis is an irresistible storyteller and a master at illuminating complicated and fascinating subjects."
― Booklist, starred review
About the Author
Product details
- Publisher : W. W. Norton & Company; 1st edition (December 6, 2016)
- Language : English
- Hardcover : 368 pages
- ISBN-10 : 0393254593
- ISBN-13 : 978-0393254594
- Item Weight : 1.45 pounds
- Dimensions : 9.3 x 6 x 1.3 inches
- Best Sellers Rank: #62,385 in Books (See Top 100 in Books)
- #133 in Business Decision Making
- #210 in Decision-Making & Problem Solving
- #314 in Cognitive Psychology (Books)
- Customer Reviews:
About the author

Michael Lewis, the best-selling author of The Undoing Project, Liar's Poker, Flash Boys, Moneyball, The Blind Side, Home Game and The Big Short, among other works, lives in Berkeley, California, with his wife, Tabitha Soren, and their three children.
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Some of the more interesting thoughts in the book have nothing to do with behavioral finance, but have lots to do with psychology. Lewis discusses Daryl Morey, who I would call a basketball sabermatrician. He has been GM for the Houston Rockets since 2007 using tactics similar to those described for baseball in the book Moneyball (also by Lewis). In this same chapter Lewis provides a definition of a nerd – a person who knows his own mind well enough to mistrust it. This sounds like something Charlie Munger would say (high praise).
Both Kahneman and Tversky lived in Israel, where everyone serves a stint in the military, and both saw action in the Six Day War in 1967 and the Yom Kippur War in 1973 (when they returned from America to take up arms). Kahneman helped the Israelis design better tools for selecting officers and training pilots. Tversky was a paratrooper. Both were professors at Hebrew University at the beginning of the first war.
Our mind tricks us. After the fact, we know exactly why we saw the event coming that no one anticipated (see Taleb’s Black Swan) and surveys weigh more heavily toward events that have recently occurred. The reasons often given relate back to our days as prey on the plains of Africa (thinking fast keeps you alive in that context – you run away from a predator, as fast as you can). One of the ways to catch these inconsistencies is to devise three options, where a person chooses A over B, B over C, and C over A. This violates the law of transitivity, familiar to anyone who has ever studied algebra or logic. Lewis provides many of these examples, as did Kahneman in Thinking Fast and Slow, and I fall for nearly every one. Even after I’ve seen them before (sometimes, occasionally, I remember).
K/T developed several heuristics, where laws of chance are replaced by rules of thumb. “We often decide that an outcome is extremely unlikely, or impossible, because we are unable to imagine any chain of events that could cause it to occur. The defect, often, is in our imagination.”
• Representativeness – we see a previously developed mental model rather than thinking through the facts as presented (and are generally correct). This creates systematic errors, such as looking at a kid and immediately deciding whether they are athletic. Looking at the negative can help avoid these problems. For example, the WW2 bombs landing in London appeared to target certain areas, but really were random. If you have 23 randomly selected people in a room, the odds are better than half that at least two share a birthday.
• Availability – we more easily recall memorable events.
• Conditionality – we make contingent assumptions when none are stated. We assume normal operating conditions (e.g., normal distribution, VaR). “…people don’t know what they don’t know, but that they don’t bother to factor their ignorance into their judgments.”
• Anchoring (and adjustment) – if you are shown a large (or small) number, for example, then your response is then large (or small).
• Simulation – what could happen dominates what is likely to happen – this can lead to analysis paralysis (I find it difficult to overcome this when investing for my personal accounts – it’s hard to pull the trigger).
• Recency bias – recent events influence our probability assumptions.
• Hindsight bias - once we know how something turns out, our recollection is that we predicted it in advance (similar to Black Swans – Taleb)
How do ideas form in our mind? Is it conscious, or indirect? When we study in school, or for a credential, the focus is on repeating the “right” answer. While hard to grade, I’ve always thought it would be better to provide an answer and ask the student to improve it.
Who knew that a bad experience could be remembered more fondly if the final part of the event was not so distasteful – the peak-end rule? This was tested using colonoscopies that ended with the medical instruments brought out of the body slowly or quickly. Doing so slowly made it more likely that the person would return for future tests.
The risk manager will discover, usually the hard way, that avoiding a risk receives no reward but if you miss a risk then you will get the blame. This is a human bias.
Accounting does not consider the impact on the environment, to limited supply, or to emotions. Utility theory overstates the value. Risk aversion is a fee willingly paid to avoid regret. In any case we all prefer to avoid pain more than we want to secure gain. We react more to relative changes than absolute ones, and probability is not straightforward.
The benefits of a group often conflict with the benefit to an individual. Antibiotics are such an example. In total, limiting antibiotics is better because viruses have less chance to mutate successfully. For an individual, antibiotics are either useful or neutral. There is no downside to an individual to being treated with antibiotics.
One of the fascinating revelations in the book (for me, at least) was the need to invert. “How do you understand memory? You don’t study memory. You study forgetting.” As we study other topics we should look for opportunities to utilize this strategy.
While much of the interest in this branch of psychology is applied to investment strategies, K/T worried more about geopolitical biases and the series of avoidable mistakes that could be made by political leaders relying on gut feel. They thought that intelligence reports written as essays should be replaced by probabilities. Telling a story is not helpful in this context, but politicians tend to be afraid of numbers. We have seen evidence of this recently as briefings to the US president are said to be focused on charts and short sound bites.
As you read about financial economics, this should not be your first book. I believe it is more useful to someone already familiar with the concepts from other sources. For someone starting out on this topic I personally like Why Smart People Make Big Money Mistakes and How to Correct Them by Gary Belsky and Thomas Gilovich to start and then Thinking Fast and Slow by Kahneman before reading the Lewis book.
The first few pages of The Undoing Project surprised me. They were about sports. I knew that Lewis had written several books about sports, but I had only read two of his books, and they were about the financial world. All the same, the section about sports seemed to be about a new direction in selecting sports stars to play on professional teams, and therefore a different way of building a money-making team out of the raw material of talented athletes. It had more to do with thinking about the team, rather than letting judgement be totally dazzled by the ‘stars’. It seemed to be about what I understood ‘thinking slow’ to mean. I looked forward to reading a book which would tell me a lot about the current thinking in the ‘science’ of psychology. A readable ‘layman’s’ overview of that field (and of economics) has been something I have been looking for, for several years. I believe that I probably did get a fair idea about much of today’s ‘psychological thinking’ from this book, but I’m sorry to say that my reaction to it was much more frustration than excitement.
My take-away from reading Kahneman’s book had been that the human mind might be better understood by viewing the ‘thinking ‘ process as a collaboration of two different types of mental function with accessing memory and making judgements. ‘Fast thinking’ was an instant and almost automatic response to stimulation, something akin to how a deer runs when it perceives danger. ‘Slow thinking’ was the mental process of the sceptic, the pulling together of knowledge and conclusions from as many sources of memory as possible and the attempt to reconcile their application to the problem under consideration.
Kahneman sometimes seemed to want to classify people as either fast or slow thinkers. But, as I imagined it, virtually all human beings probably use both modes of thought constantly throughout their lives. I thought I could recognize this in myself. It seemed to me that I could see it in my family and in other people that I thought I knew well.
I had hoped to read that the science of psychology had responded to Kahneman and Tversky’s work by looking for ways to understand better the processes of human learning and improve the gargantuan system and the very disappointing results of American education. Because, as I and many others see it, the education system is acting to aggravate many of our errors rather than to improve our understanding of many of the most fundamental problems our society is grappling with.
Like all of our big systems, the education system is run by ‘experts’ who have been trained and selected by the same system that has produced their expertise. This always limits the ability of ‘insiders’ to understand fundamental weaknesses in their own system. It is the way most large governmental systems have always tried to understand their own problems, and it is probably the reason why all such systems to date have eventually failed.
When I was expressing my frustration about the book to my husband, he brought my attention to the fact that the book did touch on Kahneman and Tversky’s ideas about the implications of their book in regard to the education system just as I had hoped they would. But it was in a very brief passage that occurred near the beginning of the book and before my mind had been dulled by reading about the methodology of psychology which was illustrated in a cascade of descriptions of very familiar errors in human thought processes. I had completely forgotten the following passage:
‘After the Yom Kippur war—and the ensuing collapse of the public’s faith in the Israeli government officials—they [Kahneman and Tversky] thought that what they really should do was reform the educational system so that future leaders were taught how to think. “We have attempted to teach people to be aware of the pitfalls and fallacies of their own reasoning,” they wrote, in a passage for their popular book that never came to be. “We have attempted to teach people at various levels in government, army etc. but achieved only limited success.”
‘Adult minds were too self-deceptive. Children’s minds were a different matter. Danny {Kahneman} created a course in judgement for elementary school children, Amos [Tversky] briefly taught a similar class to high school students, and they put together a book proposal. “We found these experiences highly encouraging.” they wrote. If they could teach Israeli kids how to think—how to detect their own seductive but misleading intuition and to correct for it—who knew where it might lead? Perhaps one day those children would grow up to see the wisdom of encouraging Henry Kissinger’s next efforts to make peace between Israel and Syria. But this, too, they never followed through on. They never went broad. It was as if the temptation to address the public interfered with their interest in each other’s minds.’
It seems to me that what may have interfered with their ability to follow through in this direction, may have been their fear of not being taken seriously by their own profession. Their ‘scientists’ need to validate every suggestion by mathematical (in this case statistical) methods. The kind of human thinking which can only be done in language cannot get off the ground in such an environment. If much of mathematics is intuitive, the same can certainly be said of language. Words cannot, by themselves, produce a sense of certainty, but the failure to involve imagination expressed in language produces ‘sciences’ which are sadly lacking in their ability to help solve the most basic of human problems. It is potentially the most promising form of ‘slow thinking’.
If anyone needs an illustration of the disfavor ‘slow-thinking’ has fallen into in current times, I suggest they try to remember the public ‘dialogue’ to which we were all subjected during the recent election. It was not only the candidates who failed to show any inclination to engage in meaningful dialogue. The press and virtually all of the commentary took part in the same insane-feeling discussion. Fast-thinking has always been a part of politics, but it is depressing to think that’s all there is.
Top reviews from other countries

It's a nice story but I just can't justify investing hours of my time to read it, while I could just pick up anything written by the authors or a good novel. In short, you're better off reading Thinking Fast and Slow to learn about many of the Kahneman and Tversky's findings (it's an excellent life-changing book).
I give it 3 stars because if nothing else it's a decent homage to Kahneman and Tversky, two important figures of the last century's science.


As a result, I have finished this book and since gone on to read other books about this subject - he really has set off a chain reaction in me to understand this absorbing subject.
Of course, this is way too complicated to ever think that you have this theory sussed, but what Lewis does is give you a high level view, give you good background information and then explain it in a way that the general public can appreciate.
And thank goodness, because the small parts that I have understood, will hopefully lead to fuller understanding over time and other books.
However, do not under estimate the stories regarding the partnership of Kahneman and Tversky. Amazing individuals and complicated people, who forged an unexpected partnership that changed the psychological and economic world.

What this book achieves is to take their work and set it within a narrative structur. In doing so, it gives it context, makes it easier for the layperson to understand and adds humanity to an academic field.
The book is, of course, beautifully written. It flows with an ease making it almost impossible to put down.
If Michael Lewis should read this review, I would like to offer him my heartfelt gratitude for making the fascinating work of these incredible men come alive.
This is my most-prized book of 2016 and will be treasured forever. My one and only criticism is the frustrating lack of an index. An irrational decision in itself.
