Michael Lewis’s latest book, The Undoing Project, is about Amos Twersky and Daniel Kahneman. Both were professors who studied how we reason. They developed their ideas by asking people hypothetical questions about what they would do if they had a 1% chance of winning 1,000,000 or a 85% of winning 50%.

Here’s one I created.

Suppose there is a chance you will have to fly to Battle Creek, Michigan from New York City two weeks from now. You will probably not know if you have to or not until two days before. Assuming that the longer you wait, the most expensive the flight will be, your options are
• A chance to pay $0 if you wait to book a flight and find out you don’t have to go
• A chance to pay $300 if you book a flight in advance
• A chance to pay $900 if you wait to book a flight and find out you have to go

Which option would you choose?

Advertisements