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[20200519_114228 UTC: Updated to remove possible loss as my perceived implication of the original question.--martyb]
If you were given $1,000 to play a game, would you accept a 50 percent chance to double your money or a 100 percent guarantee of gaining an additional $500?
Implied in the question was that a 50% chance to double the $1,000 was also a 50% chance to lose all of the $1,000. Put that way, I'd take the 100% guarantee of gaining $500 more. Hmm. But why did I make that choice? What if I started with just $10? Or even $1? Would I choose differently? What if I started with $100,000 or even $1,000,000? Then what would my choice be — and why?
That opening question was one of 17 hypotheticals posed when attempting to replicate 1979 foundational research on loss aversion and prospect theory.
Global Study Confirms Influential Theory Behind Loss Aversion:
A new global study offers a powerful confirmation of one of the most influential frameworks in all of behavioral sciences and behavioral economics: prospect theory, which when introduced in 1979 led to a sea change in understanding the irrational and paradoxical ways individuals make decisions and interpret risk with major impacts for science, policy, and industry. Led by a Columbia University Mailman School of Public Health researcher, the new study in 19 countries and 13 languages replicates the original study that provided the empirical basis for prospect theory. Results appear in Nature Human Behaviour.
Developed by Nobel Prize winner Daniel Kahneman and Amos Tversky, prospect theory has been called the most influential theoretical framework in all of the social sciences and popularized the concept of loss aversion, which says that people prefer small guaranteed outcomes over larger risky outcomes. The 1979 paper that launched the theory is today the most cited paper in economics and is among the most cited in psychological science.
The new study led by Kai Ruggeri, PhD, assistant professor of health policy and management, is a robust test of prospect theory at a scale commensurate with its impact—and the first to test the theory in so many countries, languages, currencies, and to focus on the generalizability of the theory. Ruggeri and colleagues used nearly identical methods to those in the original study, modifying them only to make currency values relevant for a 2019 sample within each country. [...] In all, 4,098 respondents who completed all the questions were included in the final analysis.
Results of 1979 study—now confirmed in the new global study—gave rise to prospect theory and upended orthodoxies around rational choices. Among the original study's findings: people tend to be risk-seeking when maximizing gains, but risk-averse when minimizing losses; our preferences may change depending on how they are rendered sequentially; and we tend to overweight small probabilities.
The researchers found that Kahneman and Tversky's 1979 empirical foundation for proposing prospect theory broadly replicates in all the countries they studied: they report a 90 percent replication in areas directly testing the theoretical contrasts at the heart of prospect theory.
Journal Reference:
Kai Ruggeri, Sonia Alí, Mari Louise Berge, et al. Replicating patterns of prospect theory for decision under risk, Nature Human Behaviour (DOI: 10.1038/s41562-020-0886-x)
(Score: 4, Insightful) by aristarchus on Tuesday May 19 2020, @07:05AM (9 children)
All these operational research questions actually tell us very lite about human nature, since they are minted in the coin of radical individualist rational maximizers. For example, imagine you were being help in a cell, for a crime you did not commit, and the local Commandante makes you the offer that you can go free, if only you divert a Runaway Trolley car from five people who need organ transplants, to a lone richy sucking-up-to khallow on another track where he is a brain in a vat that does not realize he is a p-zombie, and so only Chinese Room simulates rational discourse on private property and Depends. What would you do?
(Score: 4, Touché) by maxwell demon on Tuesday May 19 2020, @07:26AM (2 children)
Well, clearly I would use my thermodemonic superpower to melt the track so the trolley hits nobody, and the prison bars so that I can escape without making hard decisions.
The Tao of math: The numbers you can count are not the real numbers.
(Score: 3, Insightful) by aristarchus on Tuesday May 19 2020, @09:20AM (1 child)
As I say, when students attempt to mess with the Gedanken experimente, "Don't mess with the scenario!" We are trying to clarify the very nature of rationality in situations of less than perfect information, not figure out how bad people are at guestimating probabilities!
(Score: 1, Touché) by Anonymous Coward on Tuesday May 19 2020, @10:18AM
You already messed with the Gedankenexperiment when you introduced a prison cell.
(Score: 3, Funny) by khallow on Tuesday May 19 2020, @08:35AM (2 children)
We'd need to know more. Is this khallow a 500 pound tubby? Do the five people eat meat? How many people are on board this trolley and how much damage will they take from bouncing off the Vat of Solitude versus a comfortable cushion of five friendly trolley catchers?
(Score: 1, Funny) by Anonymous Coward on Tuesday May 19 2020, @03:02PM (1 child)
The are 5 immigrants being transported to a death camp but it would cost the taxpayer $100k to do it humanely compared to $0 if they just die.
(Score: 0) by Anonymous Coward on Tuesday May 19 2020, @06:32PM
Only a scum-sucking lime lizard would reduce the immigrant trolley problem down to a question of money.
(Score: 0) by Anonymous Coward on Tuesday May 19 2020, @03:44PM
Ari is having a stroke.
(Score: 2) by quietus on Tuesday May 19 2020, @06:52PM (1 child)
Err, no (and a big NO at that).
Prospect theory centers around proving we're all driven by biases and heuristics i.e. we do not behave rational at all. Their authors (Kahneman & Tsversky) were and, given the little Big Recession of 2008 still obviously are, scorned by the Chicago School of Economics zealots and MBA training institutions worldwide. In other words, prospect theory takes the exact opposite position of your radical individualist rational maximizers.
You might want to read a book [wikipedia.org] about that.
(Score: 3, Insightful) by aristarchus on Tuesday May 19 2020, @07:45PM
Yes, of course. Part of my point is that operations research, or "game theory" was aimed at improving decision making is limited information situations, or not to put so fine a point on it, war gaming. Gedanken experiments, such as the classic trolley problem and many others, are heuristics aimed at clarifying moral intuitions. Psychological and Sociological uses of such things, as you correctly point out, is about discovering the actual behaviour of human animals. So Game theory, and the Chicago School of Economics, and English individualist thought in general, do posit a rational maximizer. But of course, like much of Libertarianism, it is a delusional fantasy.