Consider the story of Harry Markowitz, a Nobel Prize-winning economist who largely invented the field of investment-portfolio theory. By relying on a set of complicated equations, Markowitz was able to calculate the optimal mix of financial assets. (Due to loss-aversion, most investors hold too many low-risk bonds, but Markowitz’s work helped minimize the effect of the bias by mathematizing the decision.) Markowitz, however, was incapable of using his own research, at least when setting up his personal retirement fund. “I should have computed the historical co-variances of the asset classes and drawn an efficient frontier,” Markowitz later confessed. “Instead, I visualized my grief if the stock market … went way down and I was completely in it. My intention was to minimize my future regret. So I split my contributions 50/50 between bonds and equities.”

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One of the most refreshing things about “Thinking, Fast and Slow” is his deep sense of modesty: he is that rare guru who doesn’t promise to change your life. In fact, Kahneman admits that his decades of groundbreaking research have failed to significantly improve his own mental performance. “My intuitive thinking is just as prone to overconfidence, extreme predictions, and the planning fallacy”—a tendency to underestimate how long it will take to complete a task—“as it was before I made a study of these issues,” he writes.

http://www.newyorker.com/online/blogs/books/2011/10/is-self-knowledge-overrated.html

http://www.wired.com/wiredscience/2011/09/can-irrational-decisions-be-corrected-a-football-case-study/