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Jan. 27th, 2007 06:07 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
watertankA large majority of people prefer the sure thing over the gamble, although the gamble has higher (mathematical) expectation. ... The preference for the sure gain is an instance of risk aversion. In general, a preference for a sure outcome over a gamble that has higher or equal expectation is called risk aversion, and the rejection of a sure thing in favor of a gamble of lower or equal expectation is called risk seeking.
Choices, Values, and Frames, by D.Kahneman, A.Tversky. 2000. p.2
Bernoulli suggests that people do not evaluate prospects by the exepctation of their monetary outcomes, but rather by the expectation of the subjective value of these outcomes. p. 2
... just as the concavity of the value of gains entails risk aversion, the convexity of the value of losses entails risk seeking. Indeed, Indeed, risk seeking in losses is a robust effect, particularly when the probability of loss are substantial. p. 3
...people greatly undervalue a reduction in the probability of a hazard in comparison ot the complete elimination of that hazard. Hence, inurance should appear more attractive when it is framed as the elimination of risk thatn when it is described as a reduction of risk. p.9
The public health problem illustrates a formulation effect in which a change of wording from "lives saved" to "lives lost" induced a marked shift of preference from risk aversion to risk seeking. p. 9.
A physician, and perhaps a presidential advisor as well, could infuence the decision made by the patient or by the President, without distrting or suppressing information, merely by the framing of outcomes and contingencies. p. 10
Because lossess loom larger than gains, consumers are less likely to accept surcharge than to forego a discount. p. 10.
Most consumers will find it easier to a car stereo system or a Persiona rug, respectively, in the context of buying a car or a house than separately. These observations, of course, run counter to the standard rational theory of consumer behavior, which assumes invariance and does not recognize the effects of mental accounting. p. 12.
Choices, Values, and Frames, by D.Kahneman, A.Tversky. 2000. p.2
Bernoulli suggests that people do not evaluate prospects by the exepctation of their monetary outcomes, but rather by the expectation of the subjective value of these outcomes. p. 2
... just as the concavity of the value of gains entails risk aversion, the convexity of the value of losses entails risk seeking. Indeed, Indeed, risk seeking in losses is a robust effect, particularly when the probability of loss are substantial. p. 3
...people greatly undervalue a reduction in the probability of a hazard in comparison ot the complete elimination of that hazard. Hence, inurance should appear more attractive when it is framed as the elimination of risk thatn when it is described as a reduction of risk. p.9
The public health problem illustrates a formulation effect in which a change of wording from "lives saved" to "lives lost" induced a marked shift of preference from risk aversion to risk seeking. p. 9.
A physician, and perhaps a presidential advisor as well, could infuence the decision made by the patient or by the President, without distrting or suppressing information, merely by the framing of outcomes and contingencies. p. 10
Because lossess loom larger than gains, consumers are less likely to accept surcharge than to forego a discount. p. 10.
Most consumers will find it easier to a car stereo system or a Persiona rug, respectively, in the context of buying a car or a house than separately. These observations, of course, run counter to the standard rational theory of consumer behavior, which assumes invariance and does not recognize the effects of mental accounting. p. 12.
