The average investor's return is significantly lower than market indices due primarily to market timing.
Daniel KahnemanRead
We think, each of us, that we're much more rational than we are. And we think that we make our decisions because we have good reasons to make them. Even when it's the other way around. We believe in the reasons, because we've already made the decision.
Interpretation
What this quote means
Our beliefs about our rationality often blind us to the true nature of our decision-making processes.
In this quote, Daniel Kahneman emphasizes how humans tend to overestimate their rationality and the motivations behind their decisions. He argues that we frequently construct justifications for our choices after making them, rather than making decisions based on objective reasoning. This suggests a fundamental bias in our self-perception, where we fail to recognize the influence of emotions and preconceived notions in our decision-making.
Themes
Decision MakingRationalityBiasSelf-PerceptionJudgment
In practice
Example use cases
This quote can be used in a lecture about cognitive biases to highlight how people justify their decisions post hoc.
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