Understanding How We Think: System 1 and System 2

System 1 thinking enables us to reach a judgment quickly and effortlessly based on incomplete and even contradictory information. This ability has developed during evolution and contributed to the survival of our species, especially at the beginning of human development. System 2 “kicks in” when we encounter a complex calculation or a complex analysis problem and must think deliberately about what to do. System 1 thinking is more susceptible to cognitive biases which are unconscious errors of reasoning caused by our simplistic information processing strategies. Heuristics can be helpful and profitable but can also lead to misperceptions and incorrect judgments and conclusions. Intuitive traps generally lead to perceptual errors and make an accurate perception of reality more difficult. In contrast, heuristics can be helpful and profitable but can also lead to misperceptions and incorrect judgments and conclusions. Intuitive stumbling blocks are practical manifestations of both cognitive biases and misapplied heuristics and can affect the analyst’s day-to-day work.