Risk Policies
Chapter summary from Thinking, Fast and Slow by Daniel Kahneman.
Case-by-case decision making invites inconsistency. Each new problem feels unique, so the mind improvises—and improvisation amplifies mood, framing, and recent experience.
Risk policies are a defense. Instead of deciding fresh every time, you set rules in advance: when to insure, when to diversify, when to accept volatility.
Policies reduce the influence of the fast system, which reacts strongly to recent losses and salient fears. They also protect you from being swayed by presentation.
The slow system is required to design policies, because it can think in aggregates and long horizons. But once the policy exists, it saves effort later.
Good policies feel a bit rigid. That rigidity is the point: it keeps tomorrow’s you from renegotiating today’s principles under emotional pressure.
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