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ConorOberstIsGo
1058837.  Tue Feb 25, 2014 2:02 pm Reply with quote

knightmare wrote:
I, for one, would say that logic is rational.


I could disagree with this but I'd rather ask you if you can tell me what loss aversion actually is. A good example? And do you think it's rational?

 
Posital
1058845.  Tue Feb 25, 2014 2:35 pm Reply with quote

ConorOberstIsGo wrote:
Your strategy would be different in the long term though, if say, you had ten of each decision to make?
Yes - and I'd probably only switch strategies with four tries. And even then, if the first two weren't wins I might switch back...

 
Posital
1058851.  Tue Feb 25, 2014 2:53 pm Reply with quote

ConorOberstIsGo wrote:
knightmare wrote:
I, for one, would say that logic is rational.
I could disagree with this
I'd agree with KM - but rationality can exist in systems that aren't entirely logical.

This is because rationality is bounded because it's not possible to know everything, but it can be logical to an extent.

But logic assumes you know everything about a system. Additionally, probability is a weak attempt to bring uncertainty into the house of logic.

For me, emotionality (or gut feeling) describes any attempt to make sense of everything we don't know.

Well, that was my thesis...

 
gruff5
1058906.  Tue Feb 25, 2014 11:11 pm Reply with quote

ConorOberstIsGo wrote:
knightmare wrote:
I, for one, would say that logic is rational.


I could disagree with this but I'd rather ask you if you can tell me what loss aversion actually is. A good example? And do you think it's rational?

An example of loss aversion is insurance that you take it where it is neither legally required nor needed to cover a potential catastrophic loss (eg your house burning down without funds to replace it).

Insurance, when you take into account all the hassle of paperwork, making a claim, profits for the insurance company, claimant fraud that you subsidise, other claimants carelessness that you subsidise etc etc is a pretty bad deal.

Personally, I have a greater loss aversion to the many premiums for insurance that I could pay vs the potential large claim I've never had occasion to seek. I therefore only take out insurance when it makes practical sense to do so.

I don't advise other people to do what I do. If they prefer the (sometimes illusory) peace of mind of insurance, then that is the logical choice for them.

 
ConorOberstIsGo
1059964.  Sun Mar 02, 2014 12:50 pm Reply with quote

gruff5 wrote:

An example of loss aversion is insurance that you take it where it is neither legally required nor needed to cover a potential catastrophic loss (eg your house burning down without funds to replace it).


Personally, I have a greater loss aversion to the many premiums for insurance that I could pay vs the potential large claim I've never had occasion to seek.


So you adhere to my version of loss aversion rather than your own (avoiding a guaranteed loss by risking a housefire w/out insurance is similar to my second hypothetical.

I think we might need to get the elves in on this one...

 
knightmare
1059968.  Sun Mar 02, 2014 1:32 pm Reply with quote

Quote:
An example of loss aversion is insurance that you take it where it is neither legally required nor needed to cover a potential catastrophic loss


Excellent example, saving is the smart solution, albeit it's hard to embed it in a test because of opinions regarding insurance. Most biased people, like me, won't like insurance companies, but I'm guilty.

 
gruff5
1060013.  Sun Mar 02, 2014 11:59 pm Reply with quote

ConorOberstIsGo wrote:
So you adhere to my version of loss aversion rather than your own (avoiding a guaranteed loss by risking a housefire w/out insurance is similar to my second hypothetical...

No. I suggested that house insurance is usually a good idea, if you don't have the funds to replace it. When was the last time you saw, with your own eyes, evidence of a housefire? Very, very rare these days & generally make the national news in the UK when they happen.

My loss aversion is the insurance premiums and the loss of time in farting about with the paperwork or trying (unsuccessfully in the past) to make a worthwhile claim.

Insurance is a bit like gambling, constant modest stakes with the chance of a payout. But the odds are much more stacked against you than a roulette wheel and you also have the opportunity to minimise your risk - no open fires, no smoking in the house, don't buy on a flood plain etc etc

Companies with large fleets of cars don't insure them.

 
suze
1060151.  Mon Mar 03, 2014 12:09 pm Reply with quote

gruff5 wrote:
When was the last time you saw, with your own eyes, evidence of a housefire? Very, very rare these days & generally make the national news in the UK when they happen.


I would agree that I haven't seen evidence of one with my own eyes for some considerable time. But even so, they are more common than you perhaps think they are.

Eric Pickles's department publishes statistics about fires; I looked at a spreadsheet which can be found here.

The data for Q4 2013 have not yet been published, so I looked at a one year period from Q4 2012 to Q3 2013. In that period, the various fire brigades in England attended a total of 173,745 fires. More than half of these were "secondary fires", which means things like grass fires, fires in flytipped rubbish (notably tyres), and fires in derelict buildings and abandoned cars.

But there were 74.460 "primary fires", of which 32,591 involved dwelling places (the others were mostly commercial premises and cars, although the deliberate setting fire to a collection of rare cactuses would also qualify). Those 32,591 house fires led to 236 fatalities and 6,358 persons sustaining non-fatal injuries requiring treatment. 33 of the fatalities resulted from deliberate arson - and the culprit if caught could expect to face a manslaughter charge at the least - but the other 203 were classified as accidental.

That's four a week across the country, and I would suggest that the number of such cases which do indeed make the Ten O'Clock News is rather smaller.

 
ConorOberstIsGo
1060167.  Mon Mar 03, 2014 12:34 pm Reply with quote

gruff5 wrote:

My loss aversion is the insurance premiums and the loss of time in farting about with the paperwork or trying (unsuccessfully in the past) to make a worthwhile claim.


Ah I see. But however low the risk of an uninsured house burning down (or whatever), surely it might be seen as financially insurmountable. You probably do save money on average over a lifetime by not insuring but a single event could leave you homeless, couldn't it?

PS not trying to sell you home insurance ;)

 
WordLover
1060196.  Mon Mar 03, 2014 2:13 pm Reply with quote

.....


Last edited by WordLover on Fri Sep 16, 2016 12:50 pm; edited 1 time in total

 
ConorOberstIsGo
1060198.  Mon Mar 03, 2014 2:25 pm Reply with quote

I can't get anything by you guys at all, can I? I made the whole thing up. It doesn't exist. Goodbye.

 
gruff5
1060218.  Mon Mar 03, 2014 11:21 pm Reply with quote

Well, since the main aim of QI is to stimulate discussion, I would say you're made up scenario did very well at that!

More housefires than I thought, Suze. The ones on the news are often so mundane I thought they were very rare; I suppose they are just filling in when there is no other news going on?

 
knightmare
1060240.  Tue Mar 04, 2014 4:40 am Reply with quote

Quote:
Ah I see. But however low the risk of an uninsured house burning down (or whatever), surely it might be seen as financially insurmountable.


That's why owners of a lot of houses don't need such an insurance, while people selling such an insurance think they should keep trying.

 
knightmare
1060245.  Tue Mar 04, 2014 4:48 am Reply with quote

Quote:
you won't actually give or take the multi-thousand-pound sums you speak of.


As mentioned earlier, I've seen the test recently, and they actually gave the money (GBP 10'ish) after the receiver refused to play the game of double or nothing.

Quote:
"The wise choice would be to gamble to begin with"


So the unwise choice is supposed to be to receive GBP 3000, free-of-risks.

 
knightmare
1060272.  Tue Mar 04, 2014 6:08 am Reply with quote

Quote:
That's four a week across the country


Deadly smoke often won't make the vision-news and fire-related carbon monoxide poisoning may, of course, result in a home insurance claim of about GBP 0.00.

During the last 9 years, all local "category one" home fires (2) made the news. The first time because of the 4 killed children, but basicly the house just needed a cheap new roof. The second time because several buildings, including houses, were destroyed or damaged.

 

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