The document discusses Daniel Kahneman's two systems approach to judgment and choice. System 1 operates automatically and quickly with little effort, performing simple cognitive tasks. System 2 provides attention and effort to more complex tasks, and can override System 1. The two systems work together, with System 1 generating ideas and System 2 organizing them. This two systems approach can be seen in the corporate world, where managers may have similar System 1 capabilities but differ in their System 2 abilities, such as how they respond to a falling market share.

2. Decision Making

3. Two systems Approach to
Judgments and Choice
Thinking , fast and slow
By- Daniel Kahneman

4. Two systems Approach to Judgments
and Choice
This System elaborates the difference between
• The Automatic operations of system 1
• And the controlled operations of System 2

5. System 1
System 1 works in an automatic and quick manner with little or no effort .It is also
described as effortlessly originating impressions and feelings that are the main
sources of the beliefs.
These are some examples of the automatic activities that System 1 performs :
Detect that one
object is more
distant than
another.
Complete the
phrase “bread
and…”
Make a “disgust
face” when shown
a horrible picture.
Detect a voice.
•
Orient to the
source of a sudden
sound.
Read words on
large billboards.
Drive a car on an
empty road.
Understand simple
sentences
As it can be easily seen that all these activities didn’t require much of effort and
attention

6. System 2
System 2 refers to system which provides attentions to the effortful mental activities that demand it .The
working of System 2 are often associated with the subjective experience of choice and concentration .
These are some activities that system 2 performs:Focus on the voice of a
particular person in a
crowded and noisy room.
Look for a woman
with white hair.
Search memory to
identify a surprising
sound
Maintain a faster
walking speed than is
natural for you.
Monitor the
appropriateness of
your behavior in a
social
Park in a narrow
space (for most
people except garage
attendants).
Compare two
washing machines
for overall value.
Fill out a tax form.
Check the validity
of a complex
logical argument.
Thinking about a
complex problem .
In these activities , one can notice that each of these situations require attention and mental effort .In these
situations, if you will not pay required attention then you will fail .This system also has ability to change working
style of system 1 with the help of some programming .

7. How these systems works:How these systems works:•
In this two system approach ,system 1 use to generate complex pattern of ideas
and after that system 2 use to organize those ideas into an order .
Example ;- As you are walking on the road ,suddenly you hear a noise and then you
start moving towards that direction from which that noise came to find out its
source .
•
In this situation , system 1 will hear that noise and it also immediately provokes
the attention of system 2 to find its source .

8. This two system approach in Corporate
world :•
As our study focuses on two mangers working in same position. One of them is
formally trained from a business school and other got this position because of its
experience and hard work .
•
In the above case , both of the managers have system 1 with same capability .but
difference comes in system 2 .
•
We can take a case when market share of a company is falling. In this case , both
the mangers will be tensed . As this activity will be carried out by their system 1 .
•
What about System 2 ?