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Saturday, September 30, 2017
Is the Possibility Bias Keeping Us from Having Crazy Fun?
May 30, 2014
Is the Possibility Bias Keeping Us from Having Crazy Fun?
Amateur auto racers aren’t reckless; in fact, they’re more rational about choices than the average population, according to a study by Mary Riddel of the University of Nevada, Las Vegas, and Sonja Kolstoe of the University of Oregon. Survey results show that racers’ behavior arises not from a devil-may-care attitude but from a relative insensitivity to what’s known as the “possibility” bias, an exaggerated fear of possible but low-probability negative events and an exaggerated expectation of low-probability positive events. The possibility bias, which afflicts the majority of people, leads to poor financial decisions, such as overinsuring against highly unlikely losses and overinvesting in highly unlikely payoffs.
SOURCE: Heterogeneity in life-duration preferences: Are risky recreationists really more risk loving?
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