We Overestimate the Possibility of highly Unlikely events.
And Underestimate the Possibility of highly Likely events.
𧡠Possibility / Certainty Effect
And Underestimate the Possibility of highly Likely events.
𧡠Possibility / Certainty Effect
The Possibility Effect
Imagine the following scenario:
You have to get into surgery.
The doctor tells you there is a 0% chance anything could go wrong.
This makes you feel safe.
Imagine the following scenario:
You have to get into surgery.
The doctor tells you there is a 0% chance anything could go wrong.
This makes you feel safe.
Now consider this scenario:
You have to get into surgery.
The doctor tells you there is a 5% chance you won't survive.
Now 5% feel way more scary and likely than they technically justify.
They feel much worse than half as bad as 10%, for example π .
You have to get into surgery.
The doctor tells you there is a 5% chance you won't survive.
Now 5% feel way more scary and likely than they technically justify.
They feel much worse than half as bad as 10%, for example π .
The possibility that something could happen makes it almost impossible for us to stay rational.
No surgery is 100% safe. There is always risk involved.
There's risk in everything.
But only when we hear that, we suddenly start to worry.
No surgery is 100% safe. There is always risk involved.
There's risk in everything.
But only when we hear that, we suddenly start to worry.
We can reverse this example to explain the certainty effect.
The Certainty Effect
Once again, you are supposed to get surgery, but this time the doctor tells you there is a 100% chance you die.
You wouldn't go. It's pointless.
But as soon as there is a glimpse of hope, you would go.
Let's say 95%. So a 5% chance to survive.
Once again, you are supposed to get surgery, but this time the doctor tells you there is a 100% chance you die.
You wouldn't go. It's pointless.
But as soon as there is a glimpse of hope, you would go.
Let's say 95%. So a 5% chance to survive.
True to the motto: Hope dies last.
A certain event (100%) turned into an almost certain event (95%).
The outcome is *probably* the same. But it doesn't feel like that.
Now there's hope.
A certain event (100%) turned into an almost certain event (95%).
The outcome is *probably* the same. But it doesn't feel like that.
Now there's hope.
Just as it happened in our explanation of the possibility effect, this 5% change in chance is worth a lot more.
Here's how different 5% changes in chance weigh on our minds:
From 0 to 5% - Large Impact (Possibility Effect)
From 5% to 10% - Small Impact
From 60% to 65% - Small Impact
From 95% to 100% - Large Impact (Certainty Effect)
From 0 to 5% - Large Impact (Possibility Effect)
From 5% to 10% - Small Impact
From 60% to 65% - Small Impact
From 95% to 100% - Large Impact (Certainty Effect)
Iβm aware this was a pretty depressing example.
But because of the emotional involvement, it's a great way to explain these phenomena.
The lottery, or other very unlikely gambles, do a good job explaining the possibility effect also.
But because of the emotional involvement, it's a great way to explain these phenomena.
The lottery, or other very unlikely gambles, do a good job explaining the possibility effect also.
Regularly spending money on tickets that have a 1:65,000,000 chance of winning is everything but rational.
But once again, hope dies last.
But once again, hope dies last.
If you made it here, thanks for readingππΌ
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If you enjoyed this Thread, I would appreciate your support by Retweeting or Liking it.
For more content about
β’ Investing
β’ Psychology
β’ Philosophy
And more, follow
@MnkeDaniel ππΌ
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