In the decision sciences, a clear distinction is made between risk and uncertainty. You take a risk when you know in advance all the potential outcomes of your choice, and their respective probabilities. This risk description covers things like coin tosses, lotteries and spins of a slot machine. In such circumstances, only cold logic, statistical thinking, and possibly a pocket calculator, should influence your decision about whether to run the risk or not. As soon as some of the outcomes, and/or some of the probabilities, are not known, we enter the realm of uncertainty. In this less ordered domain, reason and statistics become less useful because there is nothing to calculate. Instead, argue decision scientists, one should rely more on one’s intuition, gut feelings and rules-of-thumb. Examples of such judgements include living to be one hundred years old, falling in love, or being killed by a terrorist. Any decision to bet on them – or insure against them – involves dealing with uncertainty… Read more on TCAM’s website
First you would think about whether its memory holds any sensitive data, and wonder what the stranger might do with it. Once you’re satisfied there are no ill intentions, you would decide whether you believe the stranger has the ability to repair smartphones. Given the success of the entire transaction depends on the latter, it seems counter-intuitive that this judgment be made only as a second step, yet this precisely what we all do. Read more on TCAM’s website
I was recently fortunate enough to have been able to attend a lecture by French economist, Professor Thomas Piketty, at Frankfurt’s Goethe University. So celebrated is the author of ‘Capital in the 21st Century‘, the packed amphitheatre had to wait fully 30 minutes before the professor was allowed to open his mouth. First we had to endure a speech from the university’s chancellor, then the French ambassador (who had been flown in from Berlin, even though France has consular representation in Frankfurt scarcely three kilometers from where we sat). Thereafter came the obligatory word from the sponsors, and an unusually lengthy introduction from the moderator. Everyone wanted a piece of the action – a sprinkling of Piketty Dust.