System 1 and System 2 Thinking

Omer Lewinsohn

Omer Lewinsohn

When I was 18 years old I read about the concept of System 1 and System 2 and since then my life has changed and been shaped by this understanding. In fact, I think that the concept of System 1 and System 2 is one of the most astonishing discoveries you can learn about people and how they choose.

In the traditional economy, we believe that people are rational agents that make decisions based on cold calculations of pros and cons. The truth is that our emotional and automatic reactions are much more powerful than we think.

With 122-35,000 decisions per day, the understanding of how we choose can be a game changer in your personal and professional life.

And here is when System 1 and System 2 get into the game.

What is System 1?

System 1 is a term used in behavioral economics and psychology to refer to the part of our brain that makes quick, automatic, and intuitive decisions without conscious thought. It’s sometimes referred to as the “fast” system or “Automatic Thinking”. It’s part of our cognitive process that enables us to make quick decisions and react instinctively to situations without consciously thinking about them.

Think about activities that we perform without much conscious effort, such as driving a familiar route or typing on a keyboard. It’s also responsible for our intuitive reactions to stimuli, such as jumping over a puddle on the sidewalk or reacting to a loud noise.

Characteristics:

  • Fast and automatic
  • Unconscious and effortless
  • Based on emotions and past experiences
  • Intuitive responses
  • This can lead to biases and errors in judgment

Examples:

  • Recognizing a friend’s face in a crowd
  • Instinctively jumping out of the way of a speeding car
  • Knowing how to brush your teeth or tie your shoes (you don’t need to overthink about it)
  • Absentmindedly scrolling through social media feeds
  • Deciding whether to trust someone or trust a brand
  • Automatically associating certain brands with positive or negative emotions

What is System 2?

System 2 is the term used to describe the part of our brain responsible for deliberate, analytical, and conscious decision-making. It’s often referred to as the “slow” system, and it involves more effortful and controlled cognitive processes than System 1 Thinking.

System 2 is involved in more complex reasoning, problem-solving, and decision-making tasks. It requires focused attention, concentration, and mental effort, and it can be mentally tiring. Think about the last trip you planned, the pros and cons sheet you made before purchasing your house, and the calculations you thought about when deciding which college you should go to.

Characteristics:

  • Slow and deliberate
  • Effortful and mentally taxing
  • Based on conscious reasoning and analysis
  • Involved in complex problem-solving and decision-making
  • Requires focused attention and concentration

Examples:

  • Weighing the pros and cons of different job offers
  • Making a conscious effort to overcome a bias or prejudice
  • Deciding which route to take on a road trip based on the time, distance, and traffic conditions
  • Formulating a strategy to achieve a business goal based on data and analysis
  • Evaluating the credibility and reliability of different sources of information before making a decision.

The history of System 1 and System 2

The history of System 1 and System 2 thinking dates back centuries, with philosophers and psychologists like Descartes and William James laying the foundation for the concept. The dual-process model of the mind was developed in 1975 by Michael Posner and Charles Snyder, which distinguished the two ways of thinking as automatic and controlled, respectively.

However, in 1992, John Bargh challenged the rigid characteristics of the model, and in 2011, Daniel Kahneman’s bestselling book, “Thinking, Fast and Slow,” popularized the terms System 1 and System 2 to describe the two processes.

I learned the story of those systems thanks to this amazing book.

To be honest, I didn’t know the history of how the systems stories have been developed over the years but I found a great description on the decision lab blog.

The M&M Case Study

Credit: Business Insider

In the mid-1990s, M&Ms faced a problem. The candy had become ubiquitous and was blending in with other sweets on the shelves. It had lost its identity as an iconic brand and had become just another candy brand in the eyes of consumers.

To revitalize the brand, BBDO, an advertising agency, came up with a marketing strategy that tapped into consumers’ System 1 Thinking. They created memorable characters for each color of M&M candy, with distinct personalities, to represent the brand. The characters, including Red, Yellow, Blue, and Green, quickly became popular and allowed M&Ms to stand out from other candy brands.

By appealing to consumers’ emotions and creating memorable brand assets, BBDO successfully ingrained M&Ms into consumers’ System 1 Thinking, increasing brand awareness and loyalty.

In fact, M&M didn’t change anything in their chocolate recipe, they just humanized the candies and found their way back to the market through System 1 by doing so.

The Problem of the World and the Opportunity for Marketers

Let’s face it.

We live in a world where System 1 is the king and System 2 is the princess in exile.

Nowadays, in the world of social media’s constant drive for Instant gratification, we all live in a system 1 world. But for our defense, humans always tend to behave and decide based on system 1, much more than you think and much much more than you and I are willing to admit.

The bottom line is that Humans are not rationalists and our brains are super vulnerable to manipulations.

But this vulnerability is a real opportunity for marketers and business owners :

System 2 Thinking is not always the dominant factor in consumer decision-making. In many cases, System 1 Thinking may be more influential, particularly for routine purchases or when emotions and intuitive responses are more important than conscious deliberation.

We tend to think that our potential clients (or voters..) base their decisions on System 2 but the truth is that System 1 in most cases is much more powerful. Emotional reactions are more powerful than logical arguments.


So here is the traditional mistake of marketers and sales:

Marketers, Biz dev guys, and salespeople think that their potential prospects actually calculate each aspect of the offer and after a logical process, the client decides whether or not he or she wants to buy the product.

So under the wrong assumption that most clients use system 2, the marketers and salespeople put tons of effort into providing detailed information, logical arguments, and evidence-based claims to persuade customers and prospects.

In fact, people don’t use System 2 as much as we think and most of us decide based on the fast, reckless, emotional System 1.

So here is what you should do:
Don’t be so rational, you are not selling your product to chatGPT. You sell to human beings.
So, You should adopt a mindset of system 1 and focus on the fast reaction you can evoke in people’s minds. Think about what people feel and not what they should think.

Your brand’s ultimate goal is to be the choice of system 1, the automatic, default choice.

Here are some more examples of marketing campaigns that use effectively the System 1 Concept

In each of these examples, the marketing campaign was successful because it created an emotional connection with consumers and ingrained the brand into their System 1 Thinking. Even though the products or services themselves did not change significantly, the marketing campaigns were able to create a sense of loyalty and differentiation among consumers.

Please be aware that these examples aren’t the best examples of System 1 and maybe are better examples of emotional marketing, but I mention them because I believe emotional marketing is part of the System 1 concept.

Here is an important clarification I found on communicus.

“While all emotions reside in System 1, not all System 1 thinking is emotional.”

Coca-Cola’s “Share a Coke” Campaign

In 2011, Coca-Cola launched a new marketing campaign in Australia that allowed customers to personalize their bottles with their own names or those of their friends and family members. The campaign was an instant hit, with sales increasing by 7% in the first month alone. The success of the campaign can be attributed to its ability to tap into consumers’ emotions and create a sense of personal connection with the brand.

Some of the campaign’s successes according to StudySmart:

  • 500,000 photos with #ShareaCoke hashtag
  • 25+ million new followers of Coca-Cola on Facebook
  • 870 percent increase in Coca-Cola’s website traffic 3

Apple’s “Think Different” Campaign

In the late 1990s, Apple was struggling to compete with Microsoft and other PC manufacturers. To change its image, the company launched a new marketing campaign with the tagline “Think Different,” featuring iconic figures such as Albert Einstein, Martin Luther King Jr., and Mahatma Gandhi. The campaign was a huge success, helping to reposition Apple as a brand for creative thinkers and innovators.


Nike’s “Just Do It” Campaign

Nike’s famous “Just Do It” campaign was launched in 1988 and has since become one of the most recognizable slogans in advertising history. The campaign was successful because it tapped into consumers’ emotions and created a sense of motivation and empowerment. The slogan itself became a powerful brand asset, and Nike’s sales increased dramatically in the years following the campaign’s launch.

System 1 in the finance and investing world

Investment bankers and financial advisors conduct fundamental research and they truly do a very hard job but Kahneman already proved that “The Illusion Of Skill In Investing” exist.

System 1 thinking can impact investor behavior by leading to impulsive and emotional decisions based on heuristics and biases. Investors may rely on quick, intuitive judgments rather than carefully analyzing information, which can lead to errors in judgment and poor investment outcomes.

We are all investors (whether you invest in money, time, or resources) so my advice is just to be aware that you are vulnerable before making decisions.

So here are 2 ideas about system 1 and cognitive biases that might help you:

FOMO (Fear Of Missing Out) – Many investors experience FOMO, which is the fear that they will miss out on an investment opportunity that could lead to significant gains. It can stock but you can even invest much of your time because of the FOMO.

Confirmation Bias – Confirmation bias occurs when investors seek out information that confirms their existing beliefs or opinions about a particular stock or the market in general. That’s why I’m never impressed by “consensus of analysts”.

What marketers can do with System 1 thinking?

In short: Do whatever you can to be the intuitive choice.

But here are some more ideas:

  1. Focus on the three brand metrics: Fame, Feeling, and Fluency. To be the intuitive choice, your brand needs to be recognizable, evoke positive emotions, and come to mind first. Use behavioral science to understand how to tap into these metrics.
  2. Be customer-obsessed and focus on creating consistently positive experiences. Memories matter, and customers remember bad experiences. Ensure that your brand provides a smooth and consistent customer experience across all touchpoints, whether it be in-store, online, or through customer service.
  3. Use positive PR to keep your brand in the news and drive positive thinking from customers. Regularly promote your brand in the media, whether it be mainstream news, digital PR, or online communities.
  4. Promote your brand as the best in its area, the fun brand, or the edgy brand. Use marketing campaigns that evoke positive emotions and create an emotional connection with your target audience.
  5. Utilize user experience (UX) design and UX research to ensure that your digital experiences are smooth, fast, and consistent. Focus on creating a seamless experience that allows users to complete their intended goals, which may be purchasing something from your website.

Community questions about systems 1 and 2

What is the difference between system 1 and Automatic Thinking?

Automatic thinking and System 1 thinking refers to the same concept, which is fast, intuitive, and automatic thinking that relies on mental shortcuts or heuristics. This type of thinking is often used to quickly process information and make decisions based on intuition and previous experiences, without the need for conscious effort or reflection.

Can system 1 be trained?

Yes, to a certain extent, System 1 can be trained. Through repetition and reinforcement, System 1 can learn to recognize patterns and respond quickly and automatically. For example, professional athletes, musicians, and even chess players rely on System 1 thinking to make quick and automatic decisions based on their training and experience.

Similarly, marketers and advertisers can train System 1 through consistent branding and messaging, creating strong associations between their brand and certain emotions or attributes in consumers’ minds. However, it is important to note that while System 1 can be trained, it is not always easy to change deep-seated automatic responses and associations that have already been formed.

Are all emotional responses based on System 1?

Yes, emotional responses are primarily generated by System 1 thinking, which operates on a fast and automatic level, relying on previous experiences, biases, and heuristics to generate emotional reactions. System 2, on the other hand, operates on a slower and more deliberate level and can regulate and control emotional responses generated by System 1. However, even when System 2 is engaged, emotional responses are still rooted in System 1, as they are often based on automatic emotional associations and memories that have been formed through past experiences.

Omer Lewinsohn

Omer Lewinsohn

online entrepreneur with a passion for understanding the why behind human behavior in the digital world.