Would You Take the Bird in the Hand, or a 75% Chance at the Two in the Bush?

Monday, January 30th, 2006

Would You Take the Bird in the Hand, or a 75% Chance at the Two in the Bush? looks at people’s very different tastes for risk and what the research shows:

This short problem-solving test, [Professor Frederick] found, predicts a lot:
  1. A bat and a ball cost $1.10 in total. The bat costs $1 more than the ball. How much does the ball cost?
  2. If it takes five machines five minutes to make five widgets, how long would it take 100 machines to make 100 widgets?
  3. In a lake, there is a patch of lily pads. Every day, the patch doubles in size. If it takes 48 days for the patch to cover the entire lake, how long would it take for the patch to cover half the lake?

The test measures not just the ability to solve math problems but the willingness to reflect on and check your answers. (Scores have a 0.44 correlation with math SAT scores, where 1.00 would be exact.) The questions all have intuitive answers — wrong ones.

“Getting the math problems right predicts nothing about most tastes,” but it does predict a taste for risk and a patience for bigger, later payoffs.

Leave a Reply