Thinking, Fast and Slow

just as we perceive more signal than there really is when we make predictions, we also tend to attribute more skill than is warranted to successful predictions when we assess them later. Part of the solution is to apply more rigor in how we evaluate predictions. The question of how skillful a forecast is can often be addressed through empirical met

the valence of the lottery gains or property losses swamps the associated probabilities of winning or losing.

The probability of a rare event will (often, not always) be overestimated, because of the confirmatory bias of memory. Thinking about that event, you try to make it true in your mind. A rare event will be overweighted if it specifically attracts attention. Separate attention is effectively guaranteed when prospects are described explicitly

The intense aversion to trading increased risk for some other advantage plays out on a grand scale in the laws and regulations governing risk. This trend is especially strong in Europe, where the precautionary principle, which prohibits any action that might cause harm, is a widely accepted doctrine. In the regulatory context, the precautionary pri