A Chess Master's Gut Works Because Chess Is Predictable. Investing Is Harder to Read.
Daniel Kahneman argues intuition is reliable where skill is built on a predictable world.
Inc. · Daniel Kahneman: Thinking Fast vs. Thinking Slow | Inc. MagazineDaniel Kahneman, the psychologist and economist who won the Nobel Prize and who wrote Thinking Fast and Slow, was asked a familiar business question. Isn't intuition correct nine times out of ten, and should good decision makers follow their first impressions?
His answer was no. "The chess player's gut, if the chess player is a master, is right 90% of the time," he said. "Those are situations that allow for skill."
By skill, Kahneman meant expertise built through practice. Whether intuition helps, he said, depends on how skilled the person is and how much the setting rewards that skill.
He argues that the mind works in two modes. System 1 is fast, automatic, and involuntary, the answer that pops up when someone says two plus two, or the emotion that arrives when someone says your mother. System 2 is slow, effortful, and deliberate, the mode used to control thoughts and perform complicated computations.
A chess master, he said, has a place where System 1 shines. In chess, a master can make a very quick decision about the next move, and it is likely to be a good move, because chess is the kind of predictable setting that supports that skill.
The world outside the chess board does not cooperate in the same way, Kahneman argues. It is much more complicated, and the relationship between moves and outcomes is much more complicated. As he put it, "a relatively good move is not necessarily successful."
That is why, he believes, slowing down can help. Sometimes System 2, and taking the time to be deliberate, enables a person to see things that System 1 doesn't.
The limit shows up in the kinds of choices business people face, Kahneman said, such as "whether to invest in this or that." There, the first guess is not necessarily right.
Questions people ask
How can I tell if my own gut is trustworthy in a particular area?
Psychologists say to ask two questions: is this environment regular enough to learn, and have I had enough fast, clear feedback? Chess, firefighting, and intensive care nursing often qualify. Stock picking, long-range forecasting, and hiring usually do not, because outcomes are noisy and delayed.
If I can't trust my gut on an investment, what should I do instead?
Slow the decision down and make it checkable. Write down the reason for investing beforehand, compare it to similar past cases, and seek data that could prove you wrong. Kahneman has favored checklists, outside views, and premortems, where you imagine the investment failed and explain why.
Does more business experience make gut feelings more accurate?
Only if the experience teaches the right lesson. Ten years of investing can still mislead if markets change, luck dominates, or you remember wins and forget losses. Experience helps most when you review decisions systematically, track results, and get honest feedback from people who will disagree with you.