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Showing posts from April, 2018

Neuroscience, psychology and economics: the evidence for System 3 (long)

In my last post I outlined the concept of System 3, what it is and why it matters. In short, System 3 is the mental ability to imagine the future and evaluate how happy you will be in it – based on how pleasurable the process of imagining itself is.

A lot of different research strands have come together to result in the identification of System 3 as a distinct mental process. I summarise the key steps here:
The fundamental building block of System 3 is the stimulus-response relationship. It has been known for a long time that people easily learn stimulus-response relationships when they are rewarded for the response. The classic examples come from Pavlov (who rewarded dogs with food and discovered that they would start to get excited when they saw the experimenter’s white coat – as any pet owner will recognise), and Skinner (who trained pigeons to learn that pressing a lever was associated with getting fed). Although these original experiments were done on animals, there is plenty of …

Introducing System 3: How we use our imagination to make choices

In recent years we’ve become used to thinking about decisions as “system 1” or “system 2”. System 1 choices are automatic decisions, made without thinking, based on an immediate emotional or sensory reaction. System 2 is used to stop and rationally calculate the consequences of our choices, and determine the best cost-benefit tradeoff.

But these two processes don’t capture every decision. Indeed they might only encompass a minority of our daily choices.

Recent work in neuroscience and psychology has discovered another way of making choices: with the imagination. Customers imagine their possible futures: the outcomes they would experience after a choice, and how those outcomes will make them feel. The future that makes them feel happiest will be the one they choose. These choices use different parts of the brain than System 1 and 2. They are called System 3 choices.

Think about how you might buy a car. System 1 would suggest that you see a colour, or shape, or brand of car, immed…