Probability and the Fourfold Pattern

Thinking, Fast and Slow

This flow follows the discovery that people transform probabilities into emotional decision weights, producing lotteries, insurance, and desperate gambles.

increasing

Bearing strength in each event

decreasing

Possibility Effect Possibility Effect from "Thinking, Fast and Slow". From Zero to Chance New Hope A tiny chance of a major prize feels like a qualitative transformation.

Possibility Effect from "Thinking, Fast and Slow". From Zero to Chance New Hope A tiny chance of a major prize feels like a qualitative transformation.

From Zero to Chance New Hope A tiny chance of a major prize feels like a qualitative transformation. Lottery Appeal People pay for the right to imagine winning, not merely for expected value.

Certainty Effect Certainty Effect from "Thinking, Fast and Slow". Almost Certain Is Not Certain Judicial Risk A 95% chance of winning can feel inferior to a lower guaranteed settlement.

Certainty Effect from "Thinking, Fast and Slow". Almost Certain Is Not Certain Judicial Risk A 95% chance of winning can feel inferior to a lower guaranteed settlement.

Almost Certain Is Not Certain Judicial Risk A 95% chance of winning can feel inferior to a lower guaranteed settlement. Premium for Peace Certainty commands a psychological price.

Insurance Purchase Insurance Purchase from "Thinking, Fast and Slow". Eliminating Worry Small Disaster A low probability of harm receives disproportionate weight when vividly imagined.

Insurance Purchase from "Thinking, Fast and Slow". Eliminating Worry Small Disaster A low probability of harm receives disproportionate weight when vividly imagined.

Eliminating Worry Small Disaster A low probability of harm receives disproportionate weight when vividly imagined. Protection Insurance sells relief from attention and fear as much as actuarial coverage.

Desperate Defendants Desperate Defendants from "Thinking, Fast and Slow". Gambling Against Loss Weak Case A defendant facing a likely large loss prefers a risky trial to an almost certain settlement.

Desperate Defendants from "Thinking, Fast and Slow". Gambling Against Loss Weak Case A defendant facing a likely large loss prefers a risky trial to an almost certain settlement.

Gambling Against Loss Weak Case A defendant facing a likely large loss prefers a risky trial to an almost certain settlement. Bargaining Shift The plaintiff's statistical advantage may not translate into negotiating power.

Aggregated Risk Aggregated Risk from "Thinking, Fast and Slow". Many Small Bets Narrow Losses Each gamble feels unacceptable in isolation.

Many Small Bets Narrow Losses Each gamble feels unacceptable in isolation. Broad Portfolio Bundling independent bets reduces the chance of a damaging aggregate loss.

At the beginning of the fourfold-pattern chapter

Immediately after the possibility discussion

Middle of the fourfold-pattern chapter

Later in the legal applications

Near the end of Part 4