This part of the book tackles overconfidence. Citing the work of statistician Nassim Taleb (The Black Swan), Kahneman puts the spotlight on our constant need to think in concrete terms about the world around us, and how frequently we don’t quite see the full picture, no matter what we may think. He draws from further case studies to show that “hindsight is 20/20” is more than just a cliche; in revisiting their past beliefs and opinions, people tend to paint a much more flattering picture of themselves.
Kahneman extends his critique into Wall Street. “A major industry appears to be built largely on an illusion of skill,” he writes, going on to say that, statistically speaking, mutual fund managers perform more like dice rollers than poker players. In an effort to override faulty intuition, Kahneman even dishes out tips for any managers facing a hiring decision, with the goal of having you never again say “Let’s go with that person; I got a good vibe.”