Political Animal

SMALLPOX AND PROSPECT THEORY….One of

SMALLPOX AND PROSPECT THEORY….One of my favorite economic playthings is Prospect Theory, which won a Nobel Prize for its inventor, Daniel Kahneman, last year. (Its co-inventor, Amos Tversky, died in 1996, and therefore wasn’t eligible.)

One of the key elements of prospect theory is something called framing effects: the way we react to risky decisions depends on how the decisions are framed. This was famously demonstrated by Kahneman and Tversky in a question about how people react when faced with a decision about how to handle an expected outbreak of a deadly disease.

Guess what? A hot topic these days is how we should react to the possibility of a terrorist-induced outbreak of smallpox, so you’d think prospect theory might have something to say. Well, Mark Kleiman makes the case here, and he thinks that reluctance to perform mass vaccinations is a good example of framing effects at work.

I don’t know if he’s right (difficulty in figuring the probabilities might be the real culprit), but it’s an interesting approach.

JURY DUTY….Dwight Meredith, riffing on

JURY DUTY….Dwight Meredith, riffing on my post about jury duty yesterday, asks a good question: why are so many people convinced that when their friends and neighbors serve on juries they suddenly go nuts and start handing out huge bundles of cash in frivolous cases?

As Dwight points out, we are all convinced that we would never do such a thing, but somehow trial lawyers are consistently able to pick 12 unanimous idiots to do their bidding and make ridiculous awards.

Maybe. Or maybe the problem is that if you actually hear all the facts of a case, it changes your mind? Hmmm….