A Tall Tale of Risk Aversion

Dead or Alive, It's all the Same

Amos Tversky’s and Daniel Kahneman’s 1981 paper on The Framing of Decisions and the Psychology of Choice demonstrated that people are risk averse in situations involving potential gains and risk takers in situations involving potential losses.  The researchers showed that these traits could be manipulated by presenting the same problem in a different way – so if you offer up the choice of 200 people surviving (out of 600) or 400 people dying (out of 600) then you can invert the behavior.

Nonetheless the relationship demonstrated was a statistical one.  In both cases about a quarter of people preferred the non-standard response; which should hopefully make us wonder if these people have something different about them.  One answer now suggests itself: they’re taller than the rest of us.

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Trust Is In the Eye of the Beholder

Is Beauty More Than Skin Deep?

There’s been quite a bit of debate down the years about so-called beauty biases. Various bits of research have suggested that us humans have a bit of a soft spot for other humans who are easy on the eye, to the extent that we tend to attribute abilities to them that they haven’t got. Merely looking attractive is enough to help you get on in life, it seems.

However, there are usually potentially confounding problems with these experiments, in particular the possibility that lovely looking people might actually be better at stuff than the rest of us ugly has-beens. Fortunately a combination of the banking crisis and the proliferation of the internet has offered a glorious opportunity for field experimenters to conduct a bit of real-world research. Even better, it’s suggesting that automating risk management removes a vital layer of protection for lenders and that scammers can play on these traits to defraud us. So are the beautiful also brighter?

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