THE ROUGH GUIDE TO PSYCHOLOGYpension plan and other socially desirable choices should similarly be
made the default.
Kahneman and Tversky’s most famous body of work was called Pros-
pect Theory and has to do with our uneven emotional response to gains
and losses. They showed that the size of the emotional effect of a loss is
about twice as great as the positive effect of an equivalent gain – a discrep-
ancy that affects our decision-making in predictable ways. For example,
offered a gamble with the toss of a coin, most people will only agree to
take part if they have the chance to win double (say £20) what they run the
risk of losing (say £10). In the formal jargon, most of us are loss-averse.
Related to this is a phenomenon known as framing. Imagine two experi-
mental vaccine programmes for treating a deadly virus contracted by six
hundred people. Vaccine A will definitely save two hundred lives. With
Vaccine B there is a one-third probability that six hundred people will be
saved, but a two-thirds probability that nobody will be saved. Which do you
choose? Phrased like this, Vaccine A appears to ensure the gains whereas
Vaccine B carries the likely risk of losses. Because we’re loss-averse, most
of us choose A in this situation. Now imagine choosing between Vaccine
C, using which means that four hundred people will definitely die, with
two hundred saved, and Vaccine D which carries a one-third possibility
that nobody will die and a two-thirds possibility that six hundred people
will die. These outcomes potentially match those for A and B above, but
phrased this way most people choose D over C. Definite losses are made
salient by the phrasing of option C, which puts most people off.
Another tendency when making an important decision is to look for
evidence that backs up our initial view. Psychologists call this the confir-
mation bias and it’s easily demonstrated with a version of a task devised by
Paul Wason in the 1970s. Imagine four two-sided cards, each with a letter
on one side and a symbol on the other, placed on a table like this...
...and you are told that if a card has a vowel on one side of it, then that
means it has a smiley face on the other side. Which card or cards would