Not sure about the “battleground” metaphor, but otherwise sounds about right. It’s a plug for tonight’s Horizon documentary featuring Daniel Kahneman on how we really make decisions. My governance agenda:
Post doc notes : Hmmm. Too much emphasis on “error and mistake”, too much emphasis on error relative to some “perfect” rational model – assumes perfect rational is best or right answer. Wrong, or wrong to assume necessarily right. Deviation from perfectly rational sure, but not “error”.
The loss aversion trait is only wrong if the “long term (mean) stats” are what really matter to the person making the decision as opposed to some hypothetical (non-existent) average rational agent. In practice we do NOT face an unmediated stream of repeat opportunities – all other things being equal (which they never will be).
Same comments I made when I read Kahneman originals.
Can’t believe no-one actually mentioned the bird-in-the-hand adage – it really is worth-two-in-the-bush. A loss DOES have negative worth two (or more) times greater than a prospective gain. Wisdom (and truth) in old wives rules of thumb. (Of course in some “perfect” markets, statistical long term population calcs do matter – but not in many real human situations. – Hence (macro) economics Nobel prize, but not individual human psychological.)
Kahneman’s work is very good in researching and understanding how the mind really does make decisions, but applied qualitative interpretations are as doubtful as the affects he documents. Come in Mr Quine.