A thread through the archive
Essays tagged “expected utility theory”. Follow an idea across the archive.
Scott explains prospect theory, Kahneman and Tversky's model of how people actually make decisions, showing how its value and probability weighting functions predict numerous cognitive biases including loss aversion, scope insensitivity, and framing effects.
Scott calculates that on exams penalizing wrong answers at half the reward for correct ones, guessing always has positive expected value, but none of his intelligent classmates would accept this logic despite clear explanations.
Using a haunted mansion thought experiment, Scott argues that one mind can hold separate levels of belief about ghosts: what it professes, what it bets on, and what it fears.