Daniel Kahneman explains that there is such a thing as the affect heuristic,
where judgments and decisions are guided directly by feelings of liking and disliking, with little deliberation or reasoning.
The example he had just given was the chief investment officer of a large financial firm, who told Kahneman he had just invested tens of millions of dollars in the stock of Ford Motor Company. Why? He’d gone to an automobile show and been impressed by Ford cars. “Wo, good cars!” Yes but that’s not the relevant question. The relevant question is whether the stock is currently underpriced.
The cio did an affect heuristic thing – which is pretty funny, really, given his job. But the thing is, Kahneman … Read the rest
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