Irrational Economist_ Making Decisions in a Dangerous World - Erwann Michel-Kerjan [7]
And this morning’s newspaper carried this advice in the horoscope for (my birth month) Aries:
Old problems surface. Make progress in this regard so you can avoid sharing the all-too-familiar chorus of your discontent. That tune is tired and loved ones will thank you for not playing it.
I recall that the oracle at Delphi had a reputation for prophecies sufficiently ambiguous to avoid her being proved wrong. (Now that I think of it, I’ve never checked whether the horoscopes in different newspapers provide similar advice, or whether they are sufficiently specific that their similarity can be judged.)
Before many states succumbed to the temptation to use lotteries to enhance their revenue, illegal lotteries, known as “numbers rackets,” met the demand and were able to charge higher prices for “lucky” numbers—particular numbers that, unlike one’s birth date, were not peculiar to an individual but were widely regarded as somehow blessed.
There is a well-known, and much-studied, “gamblers’ fallacy”—actually two of them. One is that if a tossed coin comes up heads four times in a row, it has “exhausted” its heads inventory and is likely to come up tails. The other is that it’s on a “roll,” and is likely to come up heads again. (If the experimenter pulls a new coin out of his pocket, after the four heads, the new coin is viewed as neutral, offering a 50-50 chance.) My statistically sophisticated colleagues dismiss these expectations with the rhetorical question, “Does the coin remember, does the coin care?” I think the believers must answer, “Someone up there does!”
Many years ago, while driving a son to school with the radio on, I would hear the advertisement of the Massachusetts Lottery Commission urging us to consider that if we concentrated hard enough we might just do better than chance with our ticket. I never knew whether the Commission meant we might predict the winning numbers or we might determine the winning numbers. (Not all of us, I’m sure, because not all of us could concentrate on the same number!) I marveled that the Commonwealth of Massachusetts would promote extrasensory perception to sell tickets. The market analysis must have led the Commission to believe that some of us could be conned. (Or did the Commissioners believe it themselves; did they even buy tickets themselves and concentrate?)
There are experiments in which people given a modest gift, a coffee mug or a sweatshirt, decline to trade it for some equally “valuable” gift that they might instead have been given. Something happens to “attach” the gift to the recipient. Similarly, people who receive lottery tickets at the door to some event have been found unwilling to trade their tickets for “equally” valuable tickets. (See the work of Ellen Langer, psychologist, Harvard University.) One explanation is that if it’s “their” day to win, they don’t want to confuse the decision by switching tickets!
In the Theory of Games it is held that in “games against nature,” such as deciding whether the weather will turn cold, or rain may ensue, nature is neutral, in contrast to games with human subjects who will act strategically. My impression is that for many people nature is not neutral. I’ve known someone whose auto collision insurance expired while he was traveling, and he wouldn’t drive until his renewed insurance was confirmed. I asked him how many collisions he’d had in some decades of driving, and the answer was none. What’s the expected value of the risk of auto damage if you drive, I asked, thinking he could give a statistical answer that would contradict his decision not to drive. Instead he smiled and said, “That’s just the day that I’d have the accident!” I