Game shows and loss aversion

I used to read and listen to a lot of pop psychology figures back in the day, until I heard about “effective altruism”. The underlying premise of this never sat well with me, and ultimately lead me to question a lot of the “wisdom” I’d absorbed during that time. Recently, an article in The Guardian about a dystopian new game show reminded me of another example from that time. ☕︎ ☕︎ ☕︎ Imagine you’re a game show contestant, and you have $50,000 on the board. The host offers you a difficult “double or nothing” question, or you can leave with your current winnings. Which would you pick? If you’re like me, you’d take the $50,000. The chance for $100,000 is a gamble with unfavourable odds, so why risk losing everything? This is irrational according to pop psychology, because we’re letting “loss aversion” cloud our judgement. We’re not “losing” anything if we take a chance, because we started the game with $0. Why not let it ride? I remember being unconvinced. True, we started the game with…

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