Concept: The Two Yous
How We Really Make Decisions
Ray Dalio of Bridgewater Associates writes in Principles that there are effectively “two yous” – and he built an entire company culture that recognizes that duality. Bridgewater is one of the world’s largest hedge funds and manages over $100B in assets for its clients, and the company itself is a meritocracy. You can’t build a meritocracy without wrangling the emotional self.
Daniel Kahneman calls the “two yous” System 1 and System 2 in his book, Thinking Fast & Slow, which is the culmination of decades of research with Amos Tversky (he passed away before the book was published), into the biases, or filters, we use when thinking. They identified more than two hundred separate cognitive biases that affect our reason, decisions, memory, and more.
System 1 is the emotional self. It’s the one in charge of intuition, fast decisions, and emotions. System 2 is the rational self. It does the reasoning, solves puzzles, and fact-checks System 1. Think of it this way: System 1 comes up with the answer to 2+2. System 2 is involved when solving 237.54 * 23.98 in your head. Or: System 1 identifies the spider on your wrist and makes you jump, while System 2 runs in the background and wonders “Is it really a spider, or just a piece of lint?” You’ve already screamed and waved your arm around and knocked over your glass before System 2 says “Oh, yeah, that’s just lint.”
When most people refer to their thinking selves, what they’re talking about is System 2. It’s the reasoning self. The one that thinks through problems, imagines outcomes, and plots a course through them. Of course, we’d picture ourselves that way, as rational actors, doing rational things.
We’re not. System 1 makes all the decisions. If I were a rational actor, I wouldn’t have owned a rear-wheel drive car in New England (but it was so fast!).
This is not to say we need to treat System 1 like an enemy. System 1 is extremely valuable. Without intuition, we wouldn’t have evolved at all - sometimes there really is a spider, and many of them are dangerous. System 1 is required to deal with the enormous amounts of information flowing towards us at any given moment, parsing it for threats, identifying good things to eat, seeking potential mates, and deciding to buy impractical cars for places where it snows.
Why is This Important?
Knowing there’s more than one side to the thinking process is critical. In a dynamic environment, as most relationships, careers, or navigating the local supermarket are becoming, knowing how we’re affected by our biases and emotions is key.
Do you know why fruit and vegetables are the first things you encounter in the typical grocery store? It’s because supermarkets are playing tricks on your brain. If you select healthy foods first, right after you enter the store, you’ve done some hard work. You’ve had to think about eating healthy. You should get a reward for that, right? It’s why you load up on produce, and then think you’re owed that pint of ice cream in the freezer aisle.
If you know how your brain segments and processes information, how you make decisions, why you gravitate towards certain outcomes over others, then you gain a significant toehold in controlling your life. Many things besides just grocery store layouts are taking advantage of the biases affecting our decision-making. If you were more aware of them, you’ll see that stuff coming.