How we decide is fooled by emotion in the second section of foreign language translation

This section reads testimonials: We can easily broken broken falls and make worse decisions after we have suffered losses.

Introduction to the Book

The first section of this chapter

The defects of the emotional system can have a very important impact. Think about the stock market, an example of a typical stochastic system. Short-term fluctuations do not provide accurate forecasts of future long-term stock market conditions. The stock market is in danger, and sometimes its movement looks predictable, at least in the short term. "People are so keen on gambling and stocks that the reason and the ability to see Snoopy in the clouds are the same. ”

When reality differs greatly from our initial predictions, it produces strong emotions: "Regret." The market bubble caused by the sudden rise in the short-term stock market was rooted in the fact that the Noumenon regretted the loss of funds for which they had not entered earlier. After that, pay for your regrets. Generally, the emotional system cannot be used to predict such a stock market with such a strong randomness.

Deal or No Deal is a very popular live game show. The show is played in 45 countries, and the rules of the game are simple: There are 26 sealed, cash-packed briefcases in front of the contestants, with cash ranging from 1 cents to $1 million. Initially, participants had the option of choosing a briefcase to put in a safe, and the amount of money in the briefcase was only known after the end of the game.

After the game officially began, in the case of 26 cases of the total amount of funds known, the contestants each round to exclude a briefcase, and can check the excluded briefcase of the amount of money, as a contestant, if it has been open, the final briefcase is it. There is also a "banker" role in the game, he will be in each round a price, the contestant can accept the price, collect this part of the money, give up to continue to open the bag. These are all the rules.

The show is a game of choice, and every round, after the bankers have finished their chips, the contestants have a few minutes to consider his next step. Show has a variety of people to participate, a very typical contestant: Nondumiso Sainsbury. She is a young girl who studies in the United States in South Africa. She plans to use all the money she gets to fund her family.

After several rounds, Nondumiso was very fortunate, and her remaining briefcase had a very large sum of money, more than 900,000 dollars. The new round began, and the banker began to bid, and he had a price lower than the current total amount divided by the number of remaining packages, below 180,000. After a discussion with her boyfriend, she chose to continue to open the bag. Fortunately, this time it was $300. In the next round, bankers raised the amount to 140,000. This time, Nondumiso still refused to open the bag once again very lucky. There are now three packages, the amount being 400,000, 500,000, 100, respectively.

This time, the banker made a seemingly fair price: $280,000. Nondumiso immediately said, "Deal, Deal!" Tears of happiness burst out in my eyes.

Not everyone is as lucky as Nondumiso. Take a look at poor frank, a European contestant. His start was not very good, and he started off with a few large cash briefcases. Now, there is only one large briefcase, and the banker gives 100,000 euros in chips. Was 75% of the average value of the existing briefcase, and after thinking for a while he turned down the banker, and unfortunately, he opened the briefcase, which contained 500,000 euros. In the new round, bankers ' bids turned into 2500 euros immediately. Although a lot has been lowered, it is actually a very good offer, which is 110% of the average value of the briefcase. Frank immediately rejected the offer, and this time he was lucky to have opened 1 euros. Now, there are two briefcases, one 10 euros and one 10,000 euros. Bankers bid 6500, the average value of 130%,frank still abandoned the banker's olive branch, decided to open the package, unfortunately, opened 10,000 euros.

The experience and decision-making patterns of very many participants in Deal or No deal are very similar to Frank. After bankers ' bids have been greatly reduced, people are becoming more risk-averse, refusing to look at very good bids from a mathematical standpoint. The contestants became unable to think seriously because of the great loss in the short term. So that they continue to open the briefcase, in the pit more and more deeper.

These contestants are being victimized by a small flaw in our emotional system, a scenario that can be likened to:

"The United States is preparing for a major pandemic, and there are two options: A, 200 people will die of the disease, B: There are one-third possible, 600 will die, but two-thirds of the probability is that everyone will be saved." ”

72% of the respondents selected a,28% selected B. People are willing to save more people to avoid the risk that more people may die. However, if you make a change to the scenario:

"The United States is preparing for a major pandemic, and there are two options: A, 400 people will die of the disease, B: One-third, everyone will be saved, but two-thirds of the probability is 600 people will die." ”

At this time, 22% selected c,78% selected D. Everyone's choice became like Frank: rejected an insurance scheme and participated in a gamble.

Why are the results of the two questionnaires so different? The "loss avoidance" flaw that originates from our emotional system. Presented by Daniel Kahneman and Amos Tversky of the Hebrew University. The same amount of reference, the loss of unhappiness, than the pleasure to get serious. It is the act of loss avoidance that sometimes brings us astray, a psychological experiment in which the subjects are divided into two groups, the first set of which is the first chapter of the book as the emotional system is isolated, (thus not affected by loss avoidance) The second group of ordinary people. Everyone gets a dollar first, and then in the qualifying rounds, each round is made up of two choices: a dollar, a coin-toss decision to get $2.5 or a $1 loss. (return 1.5, loss-1) The investment rate for the first group was 83.7%, while the second group was 60%. After each 1 loss, the next decision of the second group is obviously affected, and the first group has no such phenomenon.

Back to Deal or No Deal. Imagine that you are frank. A minute ago, the banker's bid was 100,000 euros, now turning 2500. Should you accept the current deal? At this point, your emotional system will have a lot of negative emotions, even though 2500 is a good deal (110% of the average price) for now, but the emotional system still interprets it as a loss if it believes in intuition rather than rational analysis. Then we start to take the risk that we don't have to take.

Loss avoidance is a key research phenomenon in psychology, which leads the emotional system to think that the only way to solve the loss avoidance of "bad is stronger than good" is to understand this phenomenon and use the power of reason when it is needed.

How we decide is fooled by emotion in the second section of foreign language translation