This and other psychological experiments show that we remember intensity of experience and forget its duration. But when we plan our experiences we prefer it the other way around. As Kahneman puts it:
The evidence provides a profound challenge to the idea that humans have consistent preferences and know how to maximize them. An inconsistency is built into the design of our minds. We want pain to be brief and pleasure to last. But our memory ... has evolved to represent the most intense moment of an episode of pain or pleasure (the peak) and the feeling when the episode was at its end. [Thinking Fast and Slow.]
Some thoughts related to this bias:
1. Can explain "The flash of genius" effect when people remember suddenly "seeing" THE solution to a difficult problem. All previous and subsequent efforts to solve the problem are forgotten. The memory of being a genius has nothing to do with the solution's quality.
2. Short vacations with a peak experiences at the very end will be remembered the best.
3. Taking a lot of pictures during vacations and going over them will create a better memory. Facebook timeline can help too.
4. It is possible to plan a painful experience so that it inflicts the least psychological damage.
5. Desserts are the most important part of any dinner!