Following the schedule of our Reading Calendar
As if in a rollercoaster, we are back to a pseudo-bias in which stupid humans are not able to think as probability experts think they should.
It is clear that Carlos and I share the view of rationality that Kahneman presents here:
it helps us see the logical consistency of Human Preferences for what it is -a hopeless mirage.
However, I don’t think that the example presented in the first pages is a proof of such a consideration.
In the example, first we have to choose between a sure gain a a certain probability to win some more. Without trying any calculation most people will settle for the sure gain. However, if we are presented with two choices that both imply probabilities then we’ll make the calculation.
I don’t think that’s a problem, really. There is another way of reading the two situations. In the first situation we are faced with a real decision, and in the real world going for something sure is after all, not a bad heuristics. However, in the second situation it is clear from the framing of the problem, that the experimenter wants us to make probabilistic calculations, so we do it.
If the main point here would be that we humans are not rational in the sense described by Morgensten and von Neumann, I’d agree completely, but here Kahneman seems to argue that because we are not computing probabilities all the time we are doomed to failure and we are irrational.
The main problem described in this chapter -Samuelson’s problem- is boring as hell and it is another elaboration on how far humans are from being perfect statisticians.
The last part of the chapter, on risk policies makes sense -have a risk policy and apply it routinely whenever a relevan problem arises- but the description is too broad to be actionable.
Besides, nothing new has been presented. This chapter is mostly prescindible.