This is four part series, with each part quite short. There are also illustrations that are part of the article, available separately.
Kahneman's work in behavioral economics is transforming the economics profession by calling in question many key assumptions, for example, the concept of rationality that underlies the notion of a representative rational agent and rational expectations hypothesis, which along with the presumption of individualism, form that basis of pursuit of maximum utility as the driving motivator of homo economicus.
Kahneman's conclusions, along with those of cognitive scientists, not only question those assumptions but suggest that they are not a true representation of how people behave. It is a confirmation of Keynes's "animal spirits," in a way, but more carefully articulated and backed up with data derived from experiments
Read it at Der Spiegel
SPIEGEL Interview with Daniel Kahneman
(h/t Kevin Fathi via email)
Kahneman summarizes his book,Thinking, Fast and Slow (2011), in which he reports on his life's work in studying behavior. Wikipedia summarizes the book here, too.
Of course, Kahneman has generated considerable controversy. Jim Holt gives an overview in The New York Times, Two Brains Running (Nov. 25, 2011).
Kahneman's basic thesis is that there are two selves within each of us, although he cautions that this is just a useful fiction representing different mental functions. The first, of System 1, is the experiencing self, and the second, System 2, is the remembering self. Life is essentially remembrance of the past and projection of the future based on it, so the mental aspect that most people identify with is the remembering self.
The remembering self functions very differently from the experiencing self, and it is this dichotomy that leads to cognitive-emotional biases when the remembering self uses heuristics instead of rigorous logical reasoning based on facts to come to quick conclusions, which most people do most of the time. Rather surprisingly, the remembering self interprets experiences non-factually and not always logical. It seems that heuristics are preferred, even through often inexact, for reasons are explicable in terms of evolutionary theory.
There has been a great deal of work done on cognitive bias of late. The major cognitive biases are summarized here. Be warned, there are a lot of them.
As Kahneman notes, Buddhist meditators (and I would add, many others) attempt to disentangle the experiencing self from the remembering self and to identify with the experiencing self, which lives in the present rather than the past and future. To this I would also add, that the object of meditation is to discern the aspect of mind that experiences by observing the distinction between experiencer as subject and experienced as object.
When this has been accomplished, the task is to discover the nature of the experiencer independently of an object of experience. Finally, the objective is to stabilize this state in activity, so that both experiencing self and remembering self are recognized as changing states of mind, while one's true nature is unchanging, which is the definition of "absolute" as distinct from relative.
Now that meditation has been popularized and many people have been practicing various methods for some time, cognitive scientists are studying them to discover what effects this may have on brain function, subjective experience, and behavior. This is incorporated in the nascent field of consciousness studies.
Note: Adaptive preference for heuristics, bounded rationality, and social (cultural and institutional) influences, in addition to "cognitive noise" arising from the interaction of mind and environment, challenge the presumption that human decision-makers use rationality chiefly for optimization (max u). Kahneman focuses on preference for heuristics, Herbert A. Simon is the developer of bounded rationality. Social factors are investigated by psychology, sociology, anthropology, evolutionary theory, and institutionalism.