Book · How to decide
Thinking, Fast and Slow
Daniel Kahneman · 2011
The foundational account of how human judgement systematically fails, by the psychologist who did more than anyone to demonstrate it.
Why it is here
Angel investing consists of repeated judgements made under deep uncertainty with feedback arriving years later. That is very close to the worst possible environment for human intuition, and this is the book that explains precisely how and why it goes wrong.
The directly applicable material: the substitution of an easy question for a hard one — "do I like these founders" for "will this company be worth a hundred times what I am paying"; overconfidence in small samples; the way vivid stories overwhelm base rates. Every one of those is a described failure mode of angel investing.
Some of the specific studies it reports have been contested in the years since. The core account of how judgement fails has survived that scrutiny, and the parts most relevant to investing are among the better-supported.
Read it if
You want to understand the mechanism behind the mistakes you will make repeatedly.
Skip it if
You want prescriptions. It is exceptionally good at diagnosis and deliberately modest about cures.