Risk-aversive behaviour

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For the past little while, I have been studying for my Health and Physical Assessment midterm, which was this afternoon. Up until Tuesday, our prof let us believe that any one of the six assessments we had been taught were examinable. On Tuesday, she let us know that it would be a random choice between only two—the head/ears/eyes/nose/throat assessment and the musculoskeletal assessment, which was a pleasant surprise!

But let’s imagine for a moment that the exam actually was a random assignment to one of six assessments, like we originally thought. Let’s also pretend that you were choosing between two imaginary strategies for studying for an exam like this.

The risky strategy

Using this strategy, you will be completely prepared, and guaranteed a grade of 100% on your exam, as long as you don’t happen to be randomly assigned to the neuro assessment, and in the case that you do draw the neuro assessment, you will be totally unprepared and receive a mark of 0%.

The conservative strategy

Using this strategy, you will be 80% prepared for all six assessments. No matter which assessment you are assigned on exam day, you will receive a mark of 80%.

If you were perfectly rational, you would have most reason to choose the “risky” strategy. This is because the expected grade outcome from making a decision guaranteeing a grade of 100% 5 times out of 6 is 83%. Another way of saying that is that if you were to write a large number of exams using the risky strategy, you would expect, over the long run, to get an average grade of 83%. The expected grade outcome for the conservative strategy is, of course, 80%, for the same reason.

The common objection is, But what if I choose the risky strategy and happen to be randomised to the neuro assessment? The answer to that question is, That would suck, but you would still have made the correct decision. Decisions should be evaluated ex ante, not ex post. To adopt a rule for one’s decision-making that endorses the conservative strategy is to adopt a rule that cheats oneself out of an average of 3% per evaluation.

What’s interesting about this result is that if you were to ask any of my classmates (I asked a convenience sample already), they would unanimously say that they prefer the conservative strategy, even after explaining (and them agreeing) that such a choice is irrational. This means that, in at least this case, nursing students at McGill are willing to give up 3% of their grade for nothing but the certainty of knowing what their grade will be beforehand. This is what economists call “risk aversion,” and there are more scientific ways to measure it.

I think I’d roll the dice and go for the 100%.

BibTeX

@online{bgcarlisle2012-2750,
    title = {Risk-aversive behaviour},
    journaltitle = {The Grey Literature},
    author = {Benjamin Gregory Carlisle},
    address = {Montreal, Canada},
    date = 2012-03-16,
    url = {https://www.bgcarlisle.com/blog/2012/03/16/risk-aversive-behaviour/}
}

MLA

Carlisle, Benjamin Gregory. "Risk-aversive behaviour" Web blog post. The Grey Literature. 16 Mar 2012. Web. 20 Oct 2017. <https://www.bgcarlisle.com/blog/2012/03/16/risk-aversive-behaviour/>

APA

Carlisle, Benjamin Gregory. (2012, Mar 16). Risk-aversive behaviour [Web log post]. Retrieved from https://www.bgcarlisle.com/blog/2012/03/16/risk-aversive-behaviour/


One response to “Risk-aversive behaviour”

  1. Morty says:

    I suspect this is because the consequences for getting 0% on the exam are completely different than the consequences/rewards for getting 100%, 83%, 80% or even 51%.

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