Chapter 6. Making Decisions
Deciding Not to Decide Is a Decision
You buy a lottery ticket and win. What a fantastic decision! You cross the road at night, on red, on a busy street, slightly intoxicated, and with your eyes closed, and arrive safely on the other side. Also a good decision? Doesn’t sound like it. But what’s the difference? Both decisions had positive outcomes. In the latter case, though, we judge by the risk involved while in the former we focus on the outcome, ignoring the ticket price and the (usually low) odds of winning. However, you can’t judge a decision by the outcome alone, simply because you didn’t know the outcome when you made the decision.
Here’s another exercise: in front of you is a very large jar. It contains 1,000,000 pills. They all look the same, are all tasteless, and benign—except one, which will kill you instantly and painlessly. How much money does someone have to pay you to take a pill from this jar? Most people will answer 1 million dollars, 10 million dollars, or straight-out refuse. However, the same people are quite willing to cross the road on a red light (with their eyes open), which carries the same risk as swallowing a couple of pills. It’d be difficult to argue that the 30 seconds you saved by crossing on red would have earned you the equivalent of a few million dollars.
Humans are terrible decision makers, ...
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