Amos Tversky Quotes

It's frightening to think that you might not know something, but more frightening to think that, by and large, the world is run by people who have faith that they know exactly what is going on.

The psychologists Daniel Kahnerman and Amos Tversky have shown when humans estimate the likelihood or frequency of an event, we make that judgment based not on how often the event has actually occurred, but on how vivid the past examples are.

Chance is commonly viewed as a self-correcting process in which a deviation in one direction induces a deviation in the opposite direction to restore the equilibrium. In fact, deviations are not "corrected" as a chance process unfolds, they are merely diluted.

Amos believed that people go way out of their way to avoid minor embarrassments and he decided very early on in his life that it was not worth it.

When you are a pessimist and the bad thing happens, you live it twice. Once when you worry about it, and the second time when it happens.

When you are a pessimist and the bad thing happens, you live it twice,' Amos liked to say. 'Once when you worry about it, and the second time when it happens.

He who sees the past as surprise free is bound to have a future full of surprises.

The psychologists Amos Tversky and Eldar Shafir offered college students a five-dollar reward for filling out a survey. When given a five-day deadline, 66% of the students completed the survey and claimed their rewards. When given no deadline, only 25% ever collected their money.

The secret to doing good research is always to be a little underemployed. You waste years by not being able to waste hours.

[Metaphors] replace genuine uncertainty about the world with semantic ambiguity. A metaphor is a cover-up.

They were the economist Amos Tversky and the psychologist Daniel Kahneman. Together, the two launched the field of behavioral economics—and Kahneman won a Nobel Prize—by showing that man is a very irrational beast. Feeling, they discovered, is a form of thinking.

It is called prospect theory, and it was developed by Daniel Kahneman and Amos Tversky. What the theory claims is that evaluations are relative to a baseline. A given experience will feel positive if it’s an improvement on what came before and negative if it’s worse than what came before.

The nature of news is likely to distort people’s view of the world because of a mental bug that the psychologists Amos Tversky and Daniel Kahneman called the Availability heuristic: people estimate the probability of an event or the frequency of a kind of thing by the ease with which instances come to mind.11

Try the following experiment. Go to the airport and ask travelers en route to some remote destination how much they would pay for an insurance policy paying, say, a million tugrits (the currency of Mongolia) if they died during the trip (for any reason).Then ask another collection of travelers how much they would pay for insurance that pays the same in the event of death from a terrorist act (and only a terrorist act). Guess which one would command a higher price? Odds are that people would rather pay for the second policy (although the former includes death from terrorism). The psychologists Daniel Kahneman and Amos Tversky figured this out several decades ago.

Daniel Kahneman and Amos Tversky said that the problem with making decisions is that we are often making them under conditions of uncertainty.

The nature of news is likely to distort people’s view of the world because of a mental bug that the psychologists Amos Tversky and Daniel Kahneman called the Availability heuristic: people estimate the probability of an event or the frequency of a kind of thing by the ease with which instances come to mind.

Second, being wrong hurts us more than being right feels good. We know from Daniel Kahneman and Amos Tversky’s work on loss aversion, part of prospect theory (which won Kahneman the Nobel Prize in Economics in 2002), that losses in general feel about two times as bad as wins feel good. So winning $100 at blackjack feels as good to us as losing $50 feels bad to us. Because being right feels like winning and being wrong feels like losing, that means we need two favorable results for every one unfavorable result just to break even emotionally. Why not live a smoother existence, without the swings, especially when the losses affect us more intensely than the wins?

People pay an enormous price to avoid mild embarrassment

For all we know, the handwriting might have been on the wall all along. The question is: was the ink invisible?

When you are a pessimist and the bad thing happens, you live it twice," Amos liked to say. "Once when you worry about it, and the second time when it happens.

Happy species endowed with infinite appreciation of pleasures and low sensitivity to pain would probably not survive the evolutionary battle

The second illusion is historical myopia: the closer an era is to our vantage point in the present, the more details we can make out. Historical myopia can afflict both common sense and professional history. The cognitive psychologists Amos Tversky and Daniel Kahneman have shown that people intuitively estimate relative frequency using a shortcut called the availability heuristic: the easier it is to recall examples of an event, the more probable people think it is.10 People, for example, overestimate the likelihoods of the kinds of accidents that make headlines, such as plane crashes, shark attacks, and terrorist bombings, and they underestimate those that pile up unremarked, like electrocutions, falls, and drownings.

Novice forecasters often ask why not just say 0.5, coin toss, whenever they “know nothing” about a problem. There are several reasons why not. One is the risk of being ensnared in self-contradictions. Imagine you are asked whether the Nikkei stock index will close above 20,000 by June 30, 2015. Knowing nothing, you say 0.5 chance. Now suppose you are asked whether it will close above 22,000—and you again say 0.5—or between 20,000 and 22,000, and you again say 0.5. The more possibilities the questioner unpacks, the more obvious it becomes that the casual user of 0.5 is assigning incoherent probabilities that far exceed 1.0. See Amos Tversky and Derek Koehler, “Support Theory: A Nonextensional Representation of Subjective Probability,” Psychological Review

them. By far the best theory for describing the principles of our irrational decisions is something called Prospect Theory. Created in 1979 by the psychologists Daniel Kahneman and Amos Tversky, prospect theory describes how people choose between options that involve risk, like in a negotiation. The theory argues that people are drawn to sure things over probabilities, even when the probability is a better choice. That’s called the Certainty Effect. And people will take greater risks to avoid losses than to achieve gains. That’s called Loss Aversion. That’s why people who statistically have no need for insurance buy it. Or consider this: a person who’s told he has a 95 percent chance of receiving $10,000 or a 100 percent chance of getting $9,499 will usually avoid risk and take the 100 percent certain safe choice, while the same person who’s told he has a 95 percent chance of losing $10,000 or a 100 percent chance of losing $9,499 will make the opposite choice, risking the bigger 95 percent option to avoid the loss. The chance for loss incites more risk than the possibility of an equal gain.

Amos [Tversky] liked to say that if you are asked to do anything—go to a party, give a speech, lift a finger—you should never answer right away, even if you are sure that you want to do it. Wait a day, Amos said, and you’ll be amazed how many of those invitations you would have accepted yesterday you’ll refuse after you have had a day to think it over. A corollary to his rule for dealing with demands upon his time was his approach to situations from which he wished to extract himself. A human being who finds himself stuck at some boring meeting or cocktail party often finds it difficult to invent an excuse to flee. Amos’s rule, whenever he wanted to leave any gathering, was to just get up and leave. Just start walking and you’ll be surprised how creative you will become and how fast you’ll find the words for your excuse, he said. His attitude to the clutter of daily life was of a piece with his strategy for dealing with social demands. Unless you are kicking yourself once a month for throwing something away, you are not throwing enough away, he said. Everything that didn’t seem to Amos obviously important he chucked, and thus what he saved acquired the interest of objects that have survived a pitiless culling.

Thinking & Wisdom: Peter Bevelin, Edward de Bono, Benjamin Franklin, Daniel Gilbert, Daniel Kahneman, Jiddu Krishnamurti, Steven Pinker, Tania Singer, Amos Tversky.   Philosophy & Effective Living: James Allen, Stephen Covey, Viktor Frankl, Tamar Gendler’s Open Yale philosophy lectures, Daniel Gilbert, Khalil Gibran, A.C.

A second problem is called “anchoring”. In a classic study Amos Tversky and Daniel Kahneman secretly fixed a roulette wheel to land on either 10 or 65. The researchers span the wheel before their subjects, who were then asked to guess the percentage of members of the United Nations that were in Africa. Participants were influenced by irrelevant information: the average guess after a spin of 10 was 25%; for a spin of 65, it was 45%. In meetings, anchoring leads to a first-mover advantage. Discussions will focus on the first suggestions (especially if early speakers benefit from a halo effect, too). Mr Kahneman recommends that to overcome this, every participant should write a brief summary of their position and circulate it prior to the discussion.

isn’t the initial loss that does for him, but the stupid plays he makes in an effort to deny that the loss has happened. The great economic psychologists Daniel Kahneman and Amos Tversky summarised the behaviour in their classic analysis of the psychology of risk:

We are not very good at guessing how long things will last or how frequently events occur together. This myopic tendency was beautifully researched in the late 1960s by Amos Tversky and Daniel Kahneman. Their availability heuristic bias soon found acceptance in most fields.

You see the shadow. Snap! You are frightened—and running. That’s the “availability heuristic,” one of many System 1 operations—or heuristics—discovered by Daniel Kahneman, his collaborator Amos Tversky, and other researchers in the fast-growing science of judgment and choice.

En 1971, los psicólogos Danny Kahneman y Amos Tversky plantearon a profesores de estadística preguntas formuladas como cuestiones no estadísticas. Una era similar a la siguiente (he cambiado un tanto el ejemplo para mayor claridad): supongamos que vivimos en una ciudad que dispone de dos hospitales, uno grande y otro pequeño. Cierto día, el 60% de los bebés nacidos en uno de los dos hospitales son niños. ¿En qué hospital es más probable que haya ocurrido? Muchos estadísticos cometieron el error (como en una conversación informal) de escoger el hospital más grande, cuando de hecho la estadística se basa en que las muestras grandes son más estables y deberían fluctuar menos respecto al promedio a largo plazo —aquí, el 50% para cada sexo— que las muestras más pequeñas. Esos estadísticos hubieran suspendido sus propios exámenes.

Poker players explained to me that there’s a particular moment at which players are extremely vulnerable to an emotional surge. It’s not when they’ve won a huge pot or when they’ve drawn a fantastic hand. It’s when they’ve just lost a lot of money through bad luck (a ‘bad beat’) or bad strategy. The loss can nudge a player into going ‘on tilt’ – making overly aggressive bets in an effort to win back what he wrongly feels is still his money. The brain refuses to register that the money has gone. Acknowledging the loss and recalculating one’s strategy would be the right thing to do, but that is too painful. Instead, the player makes crazy bets to rectify what he unconsciously believes is a temporary situation. It isn’t the initial loss that does for him, but the stupid plays he makes in an effort to deny that the loss has happened. The eat economic psychologists Daniel Kahneman and Amos Tversky summarised the behaviour in their classic analysis of the psychology of risk: ‘a person who has not made peace with his losses is likely to accept gambles that would be unacceptable to him otherwise’. Even those of us who aren’t professional poker players know how it feels to chase a loss.

Did you notice the pattern in the three examples? In each instance, we predicted substitution when in fact the new technology turned out to increase the willingness-to-pay (WTP) for existing products and activities. This type of bias is the norm. We fear change; potential losses loom larger than similar gains, a phenomenon that psychologists Amos Tversky and Daniel Kahneman call loss aversion.12 Loss aversion keeps us preoccupied with the risk of substitution even when we look at complementarities.

So interesting that Shore decided there might be a book in it. He set out to find fertile pairs—people who had been together for at least five years and produced interesting work. By the time he was done he had interviewed a comedy duo; two concert pianists who had started performing together because one of them had stage fright; two women who wrote mysteries under the name “Emma Lathen”; and a famous pair of British nutritionists, McCance and Widdowson, who were so tightly linked that they’d dropped their first names from the jackets of their books. “They were very huffy about the idea that dark bread was more nutritious than white bread,” recalled Shore. “They had produced the research that it wasn’t so in 1934—so why didn’t people stop fooling around with the idea?” Just about every work couple that Shore called were intrigued enough by their own relationships to want to talk about them. The only exceptions were “a mean pair of physicists” and, after flirting with participating, the British ice dancers Torvill and Dean. Among those who agreed to sit down with Miles Shore were Amos Tversky and Daniel Kahneman.

His father had turned away from an early career in medicine, Amos explained to friends, because “he thought animals had more real pain than people and complained a lot less.” Yosef Tversky was a serious man.

Michigan required that all PhD students in psychology pass a proficiency test in two foreign languages. Weirdly, the university didn’t count Hebrew as a foreign language but accepted mathematics. Though entirely self-taught in mathematics, Amos chose math as one of his languages and passed the test. For his second language he picked French. The test was to translate three pages from a book in the language: The student chose the book, and the tester chose the pages to translate. Amos went to the library and dug out a French math textbook with nothing but equations in it. “It might have had the word donc in it,” said Amos’s roommate Mel Guyer. The University of Michigan declared Amos Tversky proficient in French.

Behavioural economics is an odd term. As Warren Buffett’s business partner Charlie Munger once said, ‘If economics isn’t behavioural, I don’t know what the hell is.’ It’s true: in a more sensible world, economics would be a subdiscipline of psychology.* Adam Smith was as much a behavioural economist as an economist – The Wealth of Nations (1776) doesn’t contain a single equation. But, strange though it may seem, the study of economics has long been detached from how people behave in the real world, preferring to concern itself with a parallel universe in which people behave as economists think they should. It is to correct this circular logic that behavioural economics – made famous by experts such as Daniel Kahneman, Amos Tversky, Dan Ariely and Richard Thaler – has come to prominence. In many areas of policy and business there is much more value to be found in understanding how people behave in reality than how they should behave in theory.

The closer a project is to that situation, the more individual psychology will dominate, which is what Kahneman, Amos Tversky, and other behavioral scientists have found. But as projects get bigger and decisions more consequential, the influence of money and power grows. Powerful individuals and organizations make the decisions, the number of stakeholders increases, they lobby for their specific interests, and the name of the game is politics. And the balance shifts from psychology to strategic misrepresentation.[8

Sobreestimaban mucho su evaluación previa de lo que había ocurrido en realidad. Es decir, una vez que se conocía el resultado, creían que había sido mucho más predecible de lo que habían juzgado antes. Pocos años después de que Amos describiera este trabajo a su público de Buffalo, Fischhoff llamó al fenómeno «sesgo de retrospección».

The great economic psychologists Daniel Kahneman and Amos Tversky summarised the behaviour in their classic analysis of the psychology of risk: ‘a person who has not made peace with his losses is likely to accept gambles that would be unacceptable to him otherwise’.

De modo que decidieron determinar con precisión dónde y cómo reaccionaba la gente a las probabilidades de varias apuestas que ofrecían pérdidas y ganancias. Amos llamaba a las buenas ideas «uvas pasas». Y la nueva teoría tenía tres pasas. La primera era la comprensión de que la gente reaccionaba a los cambios más que a niveles absolutos. La segunda era el descubrimiento de que la gente abordaba el riesgo de forma muy distinta cuando implicaba pérdidas que cuando ofrecía ganancias. Al explorar las reacciones de la gente a apuestas concretas encontraron una tercera pasa: la gente no reaccionaba a la probabilidad de forma sencilla.

La respuesta que ofrecían ahora era: la mente sustituye las leyes de la probabilidad por el ojo de buen cubero. A estas decisiones «a ojo», Amos y Danny las llamaron «heurística». Y la primera cuestión heurística que querían estudiar era lo que denominaban «representatividad

Los estudiantes llegaban a las clases preguntándose qué nuevo dilema iba a plantearles. Entonces, un día, les llevó a Amos Tversky.

Danny había estado en un edificio, estudiando las pupilas de la gente; y Amos en otro, ideando enfoques matemáticos relacionados con la similitud, la medición y la toma de decisiones. «No habíamos tenido mucha relación»,

The attractiveness of the risky asset depends on the time horizon of the investor. An investor who is prepared to wait a long time before evaluating the outcome of the investment as a gain or a loss will find the risky asset more attractive than another investor who expects to evaluate the outcome soon. —Richard H. Thaler, Amos Tversky, Daniel Kahneman, and Alan Schwartz, “The Effect of Myopia and Loss Aversion on Risk Taking: An Experimental Test

The paper subsequently written by Amos with Redelmeier* showed that, in treating individual patients, the doctors behaved differently than they did when they designed ideal treatments for groups of patients with the same symptoms. They were likely to order additional tests to avoid raising troubling issues, and less likely to ask if patients wished to donate their organs if they died. In treating individual patients, doctors often did things they would disapprove of if they were creating a public policy to treat groups of patients with the exact same illness. Doctors all agreed that, if required by law, they should report the names of patients diagnosed with a seizure disorder, diabetes, or some other condition that might lead to loss of consciousness while driving a car. In practice, they didn’t do this—which could hardly be in the interest even of the individual patient in question. “This result is not just another manifestation of the conflict between the interests of the patient and the general interests of society,” Tversky and Redelmeier wrote, in a letter to the editor of the New England Journal of Medicine. “The discrepancy between the aggregate and the individual perspectives also exists in the mind of the physician. The discrepancy seems to call for a resolution; it is odd to endorse a treatment in every case and reject it in general, or vice versa.” The point was not that the doctor was incorrectly or inadequately treating individual patients. The point was that he could not treat his patient one way, and groups of patients suffering from precisely the same problem in another way, and be doing his best in both cases. Both could not be right. And the point was obviously troubling—

In a 1982 study, psychologists Amos Tversky and Thomas Gilovich discovered that “there was absolutely no evidence of the hot hand. A player’s chance of making a shot was not affected by whether or not his previous shots had gone in. Each field goal attempt was its own independent event,” (Lehrer). However, some players allow a missed shot to affect their confidence, and they question their technique. When they question their technique, and shoot at a conscious level, they alter their technique, reducing consistency.

Even so, most of the stories people told about Amos [Tversky] had less to do with what came out of his mouth than with the unusual way he moved through the world. He kept the hours of a vampire. He went to bed when the sun came up and woke up at happy hour. He ate pickles for breakfast and eggs for dinner. He minimized quotidian tasks he thought a waste of time—he could be found in the middle of the day, having just woken up, driving himself to work while shaving and brushing his teeth in the rearview mirror. “He never knew what time of the day it was,” said his daughter, Dona. “It didn’t matter. He’s living in his own sphere and you just happened to encounter him there.” He didn’t pretend to be interested in whatever others expected him to be interested in—God help anyone who tried to drag him to a museum or a board meeting. “For those who like that sort of thing, that is the sort of thing they like,” Amos liked to say, plucking a line from the Muriel Spark novel The Prime of Miss Jean Brodie. “He just skipped family vacations,” says his daughter. “He’d come if he liked the place. Otherwise he didn’t.” The children didn’t take it personally: They loved their father and knew that he loved them. “He loved people,” said his son Oren. “He just didn’t like social norms. A lot of things that most human beings would never think to do, to Amos simply made sense. For instance, when he wanted to go for a run he . . . went for a run. No stretching, no jogging outfit or, for that matter, jogging: He’d simply strip off his slacks and sprint out his front door in his underpants and run as fast as he could until he couldn’t run anymore. “Amos thought people paid an enormous price to avoid mild embarrassment,” said his friend Avishai Margalit, “and he himself decided very early on it was not worth it.” What all those who came to know Amos eventually realized was that the man had a preternatural gift for doing only precisely what he wanted to do. Varda Liberman recalled visiting him one day and seeing a table with a week’s worth of mail on it. There were tidy little stacks, one for each day, each filled with requests and entreaties and demands upon Amos’s time: job offers, offers of honorary degrees, requests for interviews and lectures, requests for help with some abstruse problem, bills. When the new mail came in Amos opened anything that interested him and left the rest in its daily pile. Each day the new mail arrived and shoved the old mail down the table. When a pile reached the end of the table Amos pushed it, unopened, off the edge into a waiting garbage can. “The nice thing about things that are urgent,” he liked to say, “is that if you wait long enough they aren’t urgent anymore.” “I would say to Amos I have to do this or I have to do that,” recalled his old friend Yeshu Kolodny. “And he would say, ‘No. You don’t.’ And I thought: lucky man!

Yosef Tversky, the son of a rabbi, despised religion and loved Russian literature, and found a great deal of amusement in what came out of the mouths of his fellow human beings. His father had turned away from an early career in medicine, Amos explained to friends, because “he thought animals had more real pain than people and complained a lot less.

The peak-end effect described by Daniel Kahneman and Amos Tversky could contribute as well. We would be prone to creating strong memories for the more rewarding aspects of a past scene and obscure the rest. Memory is imperfect.

Unfortunately, for every IPO like Microsoft that turns out to be a big winner, there are thousands of losers. The psychologists Daniel Kahnerman and Amos Tversky have shown when humans estimate the likelihood or frequency of an event, we make that judgment based not on how often the event has actually occurred, but on how vivid the past examples are. We all want to buy “the next Microsoft”—precisely because we know we missed buying the first Microsoft. But we conveniently overlook the fact that most other IPOs were terrible investments. You could have earned that $533 decillion gain only if you never missed a single one of the IPO market’s rare winners—a practical impossibility. Finally, most of the high returns on IPOs are captured by members of an exclusive private club—the big investment banks and fund houses that get shares at the initial (or “underwriting”) price, before the stock begins public trading. The biggest “run-ups” often occur in stocks so small that even many big investors can’t get any shares; there just aren’t enough to go around.

Psychologist Amos Tversky once said that “the secret to doing good research is always to be a little underemployed. You waste years by not being able to waste hours.