Investors often talk about making a decision based on a feeling in their gut. Explaining how some form of unconscious intuition led them to the correct choice. Although this is an appealing notion – particularly as people only seem to mention it following success – it can also be a dangerous one. Should investors really be trusting their gut and, if so, when?
In 2009, psychologists Gary Klein and Daniel Kahneman published a paper called: “Conditions for Intuitive Expertise: A Failure to Disagree”. This work was particularly notable as the two authors had seemingly ideologically opposed views on the subject of intuitive judgements. Klein had focused much of his career on how experts often make high quality, snap judgements; whereas Kahneman had famously highlighted the flaws and biases inherent in such short-term views (often referred to as system one thinking).
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