Ipsos Encyclopedia - System1/System2

Definition: System 1 and System 2 refer to dual process theory (DPT) a class of general theories of higher cognitive processing such as reasoning. There have been 12 different theories of DPT over the past 40 or so years and the distinction between different types of thinking has been around for well over 150 years. DPT is structured around the idea of two 'systems' (1 and 2) and proposes that two forms of processing contribute to decision-making and observed behaviour:

Ipsos Encyclopedia - System1/System2

  • System 1 is fast and intuitive/experiential: System 1 engages automatic processes that run in the background (unconscious) and are rather effortless (no strong demand on our thinking such as computational capacity and working memory). System 1 uses previous experiences and the associations we have formed from those experiences including emotions.  
  • System 2 is slow and reflective: System 2 engages controlled processes (conscious) relying on more demanding reasoning (rule-based, logical, analytical).  More demanding reasoning is what makes the system slower.

The key difference between the two systems is that they differ in terms of how we construct or represent ('construe') situations or tasks in mind including of course decision-making and other experiences of consumers, shoppers, customers, patients, users of public services and citizens. When we use System 1 the situation at hand is highly influenced by context (including social and personal cues). System 2 does the opposite: context and personalisation play no essential role as the process is more controlled (reflective) and analytical.

Another way to highlight the difference is to look at impressions ('construals') from System 1 as 'natural assessments' of a situation or task informed by:

  • similarity to a previous situation
  • causality that can be established at first sight
  • gut feel (using affect to form our impression)
  • past frequency (how often we have encountered a situation).

All of these feel natural because they are largely effortless.

Because System 1 is believed to be a faster process than System 2, it works as the first impression in situations and decision tasks. However, DPT shows that in most situations, System 1 and System 2 do not lead to different inferences about the situation or task. In a small number of information processing situations, System 2 overrides System 1. Decision-making in situations of risk or uncertainty greatly impact which processes we engage or do not engage.

This version of DPT was proposed within the context of rational behaviour (the normative model of economics that posits perfect consistency and stability of how people form preferences).  DPT would account for systematic departures of rationality: how we form preferences is influenced by how options are presented or framed and a raft of perceptual and decision-making biases, many embedded in short-cuts we develop over time to build a range of fast and automatic processes. So on one side, on the basis of experimental evidence, it is possible to look at shortcuts ('heuristics') as flaws in decision-making leading to poor outcomes. On the other side, the experimental evidence equally points to shortcuts as processes that "make us smart, more often than not".

So what does a consumer look like from the point of view of DPT processing shopping situations . A simple example is that of a consumer in a supermarket:

  • looking at the shelf but ignoring sections
  • focusing on specific brands on the basis of past shopping experiences (where to look, what to pay attention to, what colour or cues mean etc)
  • remembering that the children really enjoyed their dinner last time (all system 1)

and at the same time

  • keeping an eye out for 'special' tags on shelf,
  • quickly weighing up whether a new format is better value than the current format of a brand or
  • thinking that they may wait for a better opportunity to buy larger volumes (all system 2).

System 1 and System 2 and Daniel Kahneman

Daniel Kahneman, a psychologist who received the 2002 Nobel for Economics for his work on judgement and decision-making under risk and uncertainty has called upon DPT to provide a psychological framework  to a lifetime of experimental work with various colleagues (predominantly with Amos Tversky). Kahneman uses DPT to account for his observations and conclusions about how judgment and decision making works, a bit like egg powder gives structure to custard.

The old normative model of rational decision-making of economics relies on stable and invariant preferences that lead to maximisation (people always choose best). Throughout many experiments, Kahneman (and colleagues) show that there are systematic deviations from normative rationality: framing effects and loss aversion (losses are valued/felt twice as much on average as equivalent gains) are two key examples.

Kahneman proposes to replace the rational-agent model with an intutive-agent model  that is not so much driven by what we can 'compute' or reason out but by what is 'available' to us in the moment.

As Kahneman puts it: "The central characteristic of agents is not that they reason poorly but that they often act intuitively. And the behaviour of these agents is not guided by what they are able to compute, but by what they happen to see at a given moment."

Ipsos Point Of View

Five myths about System 1 and System 2

There are a number of myths around what DPT says, what it is and what it means that result in a distorted and unhelpful view of people, especially as consumers.

Myth #1:  DPT shows that people are not rational because they rely on fast autonomous reasoning processes.

This is not true.  People do initially call upon 'natural' reasoning (engaging gut feel, using poast experiences and associations, etc.) but they also do engage conscious more effortful processes. Rationality (how reasonable the outcome of decision-making is) is not in essence dependent on engaging full-on reason or not. 

This is the way Kahneman puts it: "Attention and effort by themselves do not purchase rationality or guarantee good decisions. In some instances, too much cognitive effort actually lowers the quality of performance. There are other situations in which skilled decision makers do better when they trust their intuition than when they are engaged in detailed analysis".

In other words, relying on past experiences or gut feel (i.e. no 'reasoning') can lead to sensible, rational outcomes. Conversely, over-analysing or excessive reflection on a problem can equally lead to paralysis and a poor decision outcome.

DPT does not show that decision-making is somehow irrational. The assumption that human behaviour and cognition are largely rational is preserved, that is, we tend to achieve sensible outcomes (not necessarily perfect or the 'best possible' outcome).

To understand how DPT relates to decision-making, it is important to see the difference between rationality as used by economics which is about coherence and consistency in preferences, and rationality as used in psychology which is about reasoning: coherence-rationality and reasoning-rationality are not the same thing.

Myth # 2: DPT shows that there are two systems in mind that people can call upon in decision-making

Actually, there is no evidence that there are two distinct systems in the brain or "two minds". Psychologists now simply refer to two types to avoid the confusion.

Some psychologists also support the idea of a continuum and not two distinct types of reasoning (one intuitive and one reflective).  The idea is supported by the variation in cognitive costs required for different types of decision tasks or decision situations. For example, consumers who frequently shop at a supermarket bear very small cognitive effort given they have performed quick comparisons at the shelf thousands of times. In some environments consumers rarely face real effortful reasoning situations, especially now that they can outsource many tasks to their device (getting information, comparing, evaluating, etc.).

This is not an irrelevant distinction to make. In environments where the cognitive effort is rather low, it explains how consumers can rather move from system 1 (e.g. using their previous shopping experiences) to system 2 (processing easy cues of value maximisation such as quality cues and value cues including price). Brands do not have to choose between the two routes to either defend or gain share in their category.

There are usually opportunities on both sides. 

Myth #3: System 1 is all about emotion

Fast autonomous processes do not mean that people necessarily engage emotion to 'construe' the decision task or situation at hand and form impressions. Gut feel (the affect shortcut) is just one those processes in system 1. Other processes will be used to select information or cues (attentional bias), give more attention to one thing than another  (availability bias, anchoring) or make sure that the brain does not engage in effortful processing (e.g. confirmation bias).

On the other side, engaging in reasoning doe not mean that affect (feelings/mood/emotion) is disengaged either. There are many situations where reasoning (evaluating options, comparing, weighing) leads to engaging emotion (e.g. the pay-off of spotting a bargain online after much research).

The brain is structured in such a way that many areas of the 'thinking brain', the neo-cortex  and virtually all information coming to our senses communicate with one another through another part of the brain responsible for managing emotion (the thalamus).

So the important thing is that whichever processes we engage in a decision task or situation there is some kind of emotional resonance.

A much more useful way to think about the role of emotion in decision-making is to think of hot and cold cognition. When consumers are in a hot state, they are likely to process a situation a lot more superficially (i.e. less deeply and without much reasoning or 'thinking') than when they are in a cold state.  Moving consumers away from automatic behaviour often requires them to get into a hot state to see the situation differently, notice something that will push them to re-construct the situation differently).

Myth #4: Research is flawed because it engages respondents' system 2.

There are three critical pitfalls in research with regards to how we tap into people:

  1. People have an imperfect understanding of their own motivations. Sometimes they can be entirely oblivious to their true motivations and blurt something out that is plausible or convenient (e.g. I didn't buy this because it was too expensive or what I am most looking for is up-to-date car features).
  2. People have limited insight into their own decision processes. They may engage processes that are sub-conscious simply because they are automated. They may have difficulties giving an account of some, most or all aspects of a process.
  3. People have difficulties remembering events in many different ways:
    1. what they saw or experienced upfront and especially  at the end usually stick out.
    2. the duration of an event can have a complex impact on what we remember and how we feel about the event
    3. emotional peaks (positive or negative) along the way tend to colour disproportionately our memory of an event.

The claim that current research methods are inadequate to tap into people's motivation is grossly exaggerated. Most of the following methods have been well-established for a long time and do not rely on people  reflecting on and analysing their motivations:

  • motivational analysis through projection in focus groups or one-on-one interviews.
  • ethnography (observation in context)
  • implicit measurement of memories, strength of belief or preference or pre-disposition to act)
  • journey mapping (path tracking)
  • ​concept tests where consumers thin-slice concepts and provide quick impressions (using reference points, similarity/dissimilarity contrasts) used to predict consumer demand
  • analytical techniques to derive the influence of particular factors onto preference, pre-disposition or behaviour (e.g. choice). These techniques use data from experimental surveys (e.g. consumer experiments like shelf test, product test, choice from choice sets or simulated test market) and observational surveys (consumer diaries, behavioural and location data from passive monitoring such as sporting venues or shopping centres, prescription records from health care professionals, etc.).

At the same time, surveys that ask consumers whether a brand gives meaning to their life or what can be done to make advertising more effective are obviously ignoring that people are busy just living their life, a large part of it through auto-pilot behaviour. They have little time, inclination and ability to go into reflective introspection of their motivation or the mental 'steps' that lead them to a particular decision or choice. This does not make us irrational but it makes some questions and ways to research really inappropriate.

That people have difficulties remembering events in the past is nothing new and research asking people what they ate for dinner last night is less likely to err than research asking people what they ate for dinner each day of last week.

Fortunately, technology provides an increasing array of tools to capture behaviour closer to the moment (e.g. quick mobile survey when people are on their way to the pub rather than the day after) or passively capture a series of behaviours (passive monitoring through cookies or app monitoring the use of digital devices). Neuro-measurement such as eye tracking or facial coding and EEG offer great potential to:

  • observe what people are looking at (duration and repetition of eye 'fixations') rather than ask them post-facto which options they were looking at and considering
  • facial coding and EEG measure what consumers feel at differet points in time (e.g. watching a series of ads or scanning a shelf in a store) and determine what ad or shelf component triggers a particular response

Myth #5: DPT is the consumer behaviour framework we needed all along

Understanding how consumers engage different types of reasoning in different situations is valuable for social, consumer, customer and shopper research.  However, there is more to decision-making than reasoning processes or an endless list of biases, especially consumer decision-making that is often driven by goals (conscious or otherwise) as well as ideas of self and personal values.

Consumer psychologists recognised long ago that consumers 'construct' decision-situations on the fly. From a wealth of experiments, they developed the Constructive Choice Process (CCP) to account for the key forces driving consumer decision-making:

1. People seek to maximise (the value of their choice)

Maximisation is not about choosing the best in all circumstances but making decisions that we are happy with. Hence consumers can seek to maximise very tightly or simply try and avoid poor outcomes… and anywhere in between. It is a much more elastic view of maximisation and allows for consumers behaving as effective maximisers in some cases: for example, eye-tracking studies reveal maximising behaviour as 'eye fixations' move between mainstream brand and its private label look-alike on shelf. In other cases, customers are driven by a desire to avoid mistakes.

Context colours impressions and process through moment, time pressure, complexity, presentation of options, culture and about everything in the environment of the choice or decision situation, especially whatever is social or personal.

2. People want to avoid negative emotion

Negative experiences, thoughts, emotion (or other types of affect like feelings and mood) and social encounters resonate more strongly and for longer. Many of the quirks that affect our decision making process are there to keep negatives at bay: negativity bias, status quo bias, all forms of loss aversion, choice overload, zero-risk bias, cognitive dissonance, confirmation bias, choice supportive bias, etc.

3. People want to minimise effort

Minimising effort is as much about physical effort (how many clicks or steps) as it is about 'cognitive costs' (e.g. for a shopper accessing and updating memories of brands, attention at POS or the number of alternatives  feeding into the choice process).

Underlying our reluctance to commit effort is some form of energy conservation. ATP, an organic molecule, is the main source of power for brain function derived from glucose metabolism. ATP remains constant within the cellular machinery and is exactly balanced by glucose utilisation. Hence our natural motivation to minimise its utilisation and adopt efficient decision processes. It also accounts for our willingness to outsource more and more cognitive functions to digital devices (memory, search, evaluation, comparison, value maximisation, etc.).

A quick and rough way to remember the framework is to keep in mind that whatever the decision situation, people are lazy, easily overwhelmed and easily scared.

Among behavioural decision theorists, consumer psychologists, consumer neuroscientists and economists, the Constructive Choice Process is the established framework for decision making replacing the rational-agent model (with or without adaptations from behavioural economics) of behaviour. System 1/System 2 (DPT) sheds light on how people (consumers, shoppers, customers) engage  mental processes in a range of decision-making situations like choice under the conflicting pressures from the three key forces : seeking maximisation, avoiding negative emotion and minimising effort in a particular situation or context.

Mehr zu

Konsumenten & Shopper