The science of our biases & choices
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Economists used to theorise that human beings are rational creatures who process available information and act in such a way as to optimise expected returns. But in the 1970s, two IsraeliAmericans proved (cynics would say it is hardly necessary to prove humans are irrational!) that this was often demonstrably untrue.
Risk aversion | They ran some simple thought experiments. Try one. Suppose you are given ₹1,000, and offered two choices. Either, you can play a game where you have a 50% chance to win another ₹1,000, or you lose nothing. Or, you can accept an extra ₹450, with no obligations. What would you choose to do?
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Disclaimer
Views expressed above are the author’s own.
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