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in-consistent.bsky.social

@in-consistent.bsky.social

1/ The discussions surrounding choice under uncertainty has been both exciting and frustrating for me, a specialist in decision theory.

Kathryn Tewson@kathryntewson.bsky.social

Or, perhaps I deal with clients all the time who are trying to decide between accepting a lowball settlement or take it to trial, and I know what information people actually want and need to know to make this choice for real.

25/7/26, 10:26 pm9 reposts19 likes

Drive less and eat liver and veggie burgers!

@dogenrinzai.bsky.social

26 July

This thread is amazing!! Thank you so much!! I hope everyone engaged in that post reads it!

in-consistent.bsky.social

@in-consistent.bsky.social

25 July

2/ On the one hand, I like seeing other people thinking about the same issues that I find fascinating. On the other hand, I’ve seen lots of misunderstandings and down right incorrect things said. And as a former teacher, I have a hard time letting those go.

in-consistent.bsky.social

@in-consistent.bsky.social

25 July

3/ First, the choice of accepting a sure $50k over a 50/50 gamble between nothing and $1M is not evidence of economic irrationality. It is perfectly consistent with the canonical economic model of expected utility with risk aversion.

in-consistent.bsky.social

@in-consistent.bsky.social

25 July

4/ However, flipping the choice around so that first you are given $1M and then asked to choose between a sure loss of $950k and 50/50 gamble between losing nothing and losing all $1M is interesting to think about.

in-consistent.bsky.social

@in-consistent.bsky.social

25 July

5/ The end result is identical to the original options. However, many people would end up flipping their choice. This is known as the endowment effect and is well documented in the literature. Kahneman and Tversky did extensive work on this. Kahneman won a Nobel prize for this work.