Hi Michael, I am not too sure about your suggestion. The explanation of the focusing illusion here does not rely on decisions between risky gambles. It relies just on making as few errors as possible between the options chosen (and the fact that you make fewer mistakes when your utility gradient is steeper in the range of outcomes consid…
Hi Michael, I am not too sure about your suggestion. The explanation of the focusing illusion here does not rely on decisions between risky gambles. It relies just on making as few errors as possible between the options chosen (and the fact that you make fewer mistakes when your utility gradient is steeper in the range of outcomes considered).
If you were to consider choices between risky gambles, evolution would favour risk neutrality (when there is not a significant risk of death). A propensity to prefer high expected value gambles (in spite of a higher variance) would then be selected for. This can explain another behavioural phenomenon: overweighting of small probabilities. It is an argument made here for instance:https://www.sciencedirect.com/science/article/pii/S0899825622001774
Your intuition seems to fit more with some justifications for overconfidence which can motivate us to take risk when we overestimate our chances of success. Whether overconfidence would actually be selected for this reason is not clear. I think not because there is a cost to it (I have some work on this which I'll write about in a later post).
My point was that in both populations, individuals act **independently** without any form of coordination. The focusing illusion, much like overconfidence, could lead individuals to attempt more risky ventures or dedicate greater effort toward specific goals. While many of these attempts will fail, the independent actions of a few successful individuals can result in significant gains for the population as a whole.
With positive convexity an investment portfolio benefits from high-reward outliers despite many losses. Similarly, the evolutionary advantage here arises at the population level rather than the individual level. The independent, uncoordinated actions of individuals collectively lead to a higher likelihood of adaptive breakthroughs.
Hi Michael, I am not too sure about your suggestion. The explanation of the focusing illusion here does not rely on decisions between risky gambles. It relies just on making as few errors as possible between the options chosen (and the fact that you make fewer mistakes when your utility gradient is steeper in the range of outcomes considered).
If you were to consider choices between risky gambles, evolution would favour risk neutrality (when there is not a significant risk of death). A propensity to prefer high expected value gambles (in spite of a higher variance) would then be selected for. This can explain another behavioural phenomenon: overweighting of small probabilities. It is an argument made here for instance:https://www.sciencedirect.com/science/article/pii/S0899825622001774
Your intuition seems to fit more with some justifications for overconfidence which can motivate us to take risk when we overestimate our chances of success. Whether overconfidence would actually be selected for this reason is not clear. I think not because there is a cost to it (I have some work on this which I'll write about in a later post).
My point was that in both populations, individuals act **independently** without any form of coordination. The focusing illusion, much like overconfidence, could lead individuals to attempt more risky ventures or dedicate greater effort toward specific goals. While many of these attempts will fail, the independent actions of a few successful individuals can result in significant gains for the population as a whole.
With positive convexity an investment portfolio benefits from high-reward outliers despite many losses. Similarly, the evolutionary advantage here arises at the population level rather than the individual level. The independent, uncoordinated actions of individuals collectively lead to a higher likelihood of adaptive breakthroughs.