Wednesday, July 21, 2010


This is a fun book to read and eye opener to many people. If you have been reading about behavioral economics then it is not as new. Some illusions are useful and other are just page fillers.


  • What the authors mean here is that we only pay attention to things we expect to see.
  • In case of driving pay extra attention to the unknown.

  • This is one of the best illusions people fall for easily whether when interviewing people or in a business meeting or at college campus.
  • Most extroverted people show more confidence than introverted people. Does that confidence lead to competence?
  • Statistically Extroverted people and introverted people show the same amount of competence in accomplishing a task.

Chapter 4 - Illusion of Knowledge, or, the illusion that we have detailed knowledge about many things that, in fact, we only have vague knowledge of.

Chapter 5 - Illusion of Cause, or, the illusion that two things happening sequentially necessarily signifies cause/effect relationship.
  • This illusion is mostly seen in financial markets.
  • Most important thing to remember is correlation does not mean causality. Economic variables can show correlation for long periods of time before they break and it could be merely coincidental that they behaved that way.

Chapter 6 - Illusion of Potential, or, the illusion that in every human, there is a vast array of untapped potential waiting to come out (if only we learn to use more of our brains, listen to Mozart, "train our brains" etc.)
  • Most of the brain improvements techniques like playing Video Games, Chess or solving cross word puzzles statistically have proven not to improve the brain.
  • People who are good at Chess naturally have good IQs but you cannot say that their Chess game improved their IQ.
  • Physical Exercise improves brain more than any of the other activities.

1 comment:

lee woo said...

Leadership is unlocking people's potential to become better. See the link below for more info.