Let us imagine that you are going to purchase two items: a bat and a ball. The bat is $1 more than the ball, and the total of both is $1.10. How much does the ball cost?

If you are like most people, you will answer $0.10...

...and you would be wrong. The correct answer is 5 cents. If you think about it for a minute the question is actually very easy but about 50% of people will get the problem wrong. Most people will get the correct answer if given the chance, so why is the initial correct response rate so low?

The reason is that we actually have two distinct systems of thinking, in social sciences called "System 1" and "System 2." System 1 is the highly efficient, quick and intuitive. System 2 is analytical, slow and deliberate. We tend to favor system 1 as it is much quicker and is a much better survival instinct mechanism. If you are a human ten thousand years ago and there is an approaching tiger, your analytical brain will get you killed while your intuitive brain will cause you to run. System 1 also avoids car accidents and helps you hit baseballs. It does not, however, help you in investing in the stock market or solve math problems like the one above. The reason so many people get the above problem incorrect is because the problem is deliberately structured to engage intuitive thinking. 1.10 breaks nicely into 1.00 and 0.10 and so your system 1 thinking sabotages your system 2 thinking and delivers you the intuitive, yet incorrect, answer. Furthermore, your system 1 thinking prevents you from engaging your system 2 thinking in order to contemplate whether or not the answer is correct. You just go with it.

The above example is really just a trick, but it does expose a deep seeded problem with our thinking. Our intuition will sabotage our rationality in such a way that we are unaware that it is happening. This is the core of many issues of mis-judgement, called heuristics and biases in the world of social science. The false application of system 1 onto problems which require system 2 are well studied and quite prolific. Going forward I will cover more examples of issues that arise from these 2 systems of thinking and how they apply to real problems.