Dynamist Blog

Intuition, Reflection, and Risk

My latest NYT column looks at some fascinating, and fun work by MIT's Shane Frederick on the connection between cognitive ability and attitudes toward risk and waiting. Those psych test subjects are more diverse--in important ways--than you'd think from the generalizations we often hear from psychologists and behavioral economists. Fortunately, investment, loan, and insurance markets largely accommodate this variety, no personality tests needed.

And, to answer some of my emails in public, if you think the question about a 15 percent chance of $1,000,000 is a misprint or wrongly reported, it isn't. Those are the real results, and they're remarkably consistent. In fact, at 1% and 3% chances, essentially everyone went for the sure $500, with no distinguishable difference among groups.

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