Daniel Kahneman, a Nobel Memorial Prize-winning behavioral economist, explains
” when people can trust their intuitive judgement and when they should be wary of it.”
“Intuition is defined as knowing without knowing how you know,” he explained. “That’s the wrong definition. Because by that definition, you cannot have the wrong intuition. It presupposes that we know, and there is really a prejudice in favor of intuition. We like intuitions to be right.”
According to Kahneman, a better definition — or a more precise one — would be that “intuition is thinking that you know without knowing why you do.” By this definition, the intuition could be right or it could be wrong, he added.
Because, according to Kahneman, intuition can often be wrong. To show an example of this, Kahneman had the crowd guess the GPA of a college senior he called Julie. He told the crowd one fact about Julie — that she read fluently at a young age — and then asked them to judge how good of a student she had been.
From research, Kahneman, who wrote The New York Times bestseller “Thinking, Fast and Slow,” said that most people guess that Julie has around a 3.7 GPA.
“You might think that this is a good answer,” he said. “It’s a terrible answer. It’s an intuition, and it’s absolutely wrong. If you were to do it statistically, you would do it completely differently. Actually, the age that people read is very little information about what student they will be 20 years later.”
According to Kahneman, this is an example of an intuition that is generated automatically with high confidence, and it’s wrong statistically.
“In general, confidence is a very poor cue to accuracy. Because intuitions come to your mind with considerable confidence and there is no guarantee they’re right.”
There are certain times when intuition can be correct. For instance, Kahneman explained, chess players and married couples generally have accurate intuition.
“Intuitions of master chess players when they look at the board [and make a move], they’re accurate,” he said. “Everybody who’s been married could guess their wife’s or their husband’s mood by one word on the telephone. That’s an intuition and it’s generally very good, and very accurate.”
According to Kahneman, who’s studied when one can trust intuition and when one cannot, there are three conditions that need to be met in order to trust one’s intuition.
The first is that there has to be some regularity in the world that someone can pick up and learn.
“So, chess players certainly have it. Married people certainly have it,” Kahnemen explained.
However, he added, people who pick stocks in the stock market do not have it.
“Because, the stock market is not sufficiently regular to support developing that kind of expert intuition,” he explained.
The second condition for accurate intuition is “a lot of practice,” according to Kahneman.
And the third condition is immediate feedback. Kahneman said that “you have to know almost immediately whether you got it right or got it wrong.”
When those three kinds of conditions are satisfied, people develop expert intuition.