Practice doesn’t make perfect when it comes to understanding risk

January 12, 2012 By Divya Menon

(Medical Xpress) -- People aren’t very good at making decisions that involve risk. Many people are afraid of airplanes, although accidents are extremely rare; some people even drive to avoid flying, putting themselves at more risk. A new study, which will be published in an upcoming issue of Psychological Science, a journal of the Association for Psychological Science, examines how people learn about risk and finds that practice does not make perfect.

Willingness to take risk is usually studied with questions, says Laurence Maloney, like this: “Would you rather have a 50-50 chance of winning $100 or would you rather just take $40 instead and not have to gamble?” Maloney, of New York University, cowrote the paper with Craig Glaser and Julia Trommershäuser of NYU and Pascal Mamassian of CNRS and Université Paris Descartes in France. But those questions from the world of economic theory don’t have a lot to do with the real-world situation of, say, deciding whether it’s safe to jaywalk.

The researchers came up with an experiment in which participants were given a chance to learn about probability. They played a kind of video game in which they fired off bullets that might or might not hit a rectangle on the screen. “It was a magic bullet,” Maloney says. “Not a very good magic bullet”—it took a zig-zagging trail and often missed. The bigger the rectangle, the more likely the bullet was to hit it. Participants did hundreds of trials with different-sized rectangles. Then they were asked to decide which rectangle they would like to aim for: a bigger one worth less money or a smaller one worth more money. Other people were told what the probabilities of hitting each rectangle were and asked to choose one.

Participants made the same choices when they learned about probability visually as when they were told the probabilities. And they made the same mistake people make when they avoid air travel: they think very unlikely events are more likely to happen.

This shows that practice isn’t enough to get people to make good decisions based on , Maloney says. “You could imagine taking someone and saying, well, let’s practice them over and over and over again until they’re experts and maybe their decision-making will be perfect.” But that’s not what happens, he says. “Basically, the key idea is that people have a distorted appreciation of probability and it doesn’t go away even when you become one of the world’s experts at shooting rectangles.”

Explore further: Who takes risks?

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Squirrel
5 / 5 (2) Jan 12, 2012
Not so stupid. People do not ditch past experience just because they practiced a game where a big rectangle has the odds set to be better overall bet than a small one. People bring a large background of experience about odds they have faced in the reality since childhood and would be irrational to dump these. It may seem to be irrational to drive rather than fly but humans also factor in their ability to control situations (high with car accidents compared to plane ones). We prefer bigger risks that offer a chance we can affect the outcome rather than smaller ones where we cannot. This may be foolish with planes vs cars but not so in other areas of life that form part of the mix that goes into our decision making.
vantagepointmoon
not rated yet Jan 12, 2012
Would you rather have a 50-50 chance of winning $100 or would you rather just take $40 instead and not have to gamble?
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I would rather take $40 instead of playing, since game is binary and expected value doesn't matter with only one attempt. On the contrary, I wouldn't take $40 if there were 10 50/50 chance games for $10 each. Series will have the same arithmetic mean for overall prize, but less risk of getting zero (even if together with lower probability of getting $100, which is still non-zero).
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And they made the same mistake people make when they avoid air travel: they think very unlikely events are more likely to happen.
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Driving vs flying is a common place when human's perception of risk is criticized, but most situations in life don't fit model distributions and we could only dream, financial analysts for example, trusted their natural risk assessment better instead of looking at only normal distribution-based models - they wouldn't overlook those heavy tails.
vantagepointmoon
not rated yet Jan 12, 2012
Double post

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