Tuesday, May 06, 2008

People are weird

Insurance = sacrifice to gods?

“It is an irony of the post-Enlightenment world,” they conclude, “that so many people who don’t believe in fate refuse to tempt it.” The psychologists first identified this reluctance last year by reconsidering a well-known superstition about lottery tickets. Experimenters had repeatedly found that once people were given a lottery ticket, they would refuse to trade it for another ticket despite being offered a cash bonus and reassured that the other ticket was just as likely to win.

This superstitious behavior had been explained with the theory of “anticipated regret”: Even though the people realized the odds were no different for any ticket, they anticipated feeling especially stupid if they traded away a winner, so they held on to their ticket just to avoid that regret.

But there’s also another reason, as Dr. Risen and Dr. Gilovich reported after running a complicated lottery game with cash prizes for competing teams. If a player watched his teammate (who was secretly a confederate of the researchers) trade away a lottery number, the player actually believed the new number was less likely to win, and he would hedge his bet accordingly.

The fear of tempting fate showed up in further experiments with Cornell students. When told about an applicant to graduate school at Stanford who had been given a Stanford T-shirt by his mother, people assumed he would hurt his chances for admission if he had the hubris to wear it. And they believed that a professor was more likely to call on them in class if they didn’t do the assigned reading.

Even people who consciously reject superstitions seem to have these gut feelings, says Orit Tykocinski, a professor of psychology at the Interdisciplinary Center Herzliya in Israel. She found that rationalists were just as likely as superstitious people to believe that insurance would ward off accidents.

In one of her experiments, players drew colored balls out of an urn and lost all their money if they picked a blue one. Some players were randomly forced to buy insurance policies that let them keep half their money if they drew a blue one. These policies didn’t diminish their risk of drawing a blue ball — but the insured players rated their risk lower than the uninsured players rated theirs.

That same magical thinking was evident when Dr. Tykocinski asked some people to imagine buying travel insurance before getting on a plane, and others to imagine not buying it because they ran out of time at the airport. Sure enough, the ones with insurance figured they were less likely to lose their bags, get sick or have an accident.

These results presumably come as no surprise to marketers of travel insurance, which is now purchased by half of American leisure travelers — a fivefold increase since 2001, according to the United States Travel Insurance Association. As a purely economic investment, some of this insurance can be dubious, particularly the flight insurance policies. (For more on this, see nytimes.com/tierneylab.)

A magical belief in insurance sounds crazy because at a rational level we realize that our decision to forgo an insurance policy is not going to affect pilots or mechanics. But Dr. Risen and Dr. Gilovich say that there’s a logical explanation for this superstition: Because calamities are so vivid and easily brought to mind, we tend to overestimate their probability when we intuitively judge what will happen if we tempt fate.

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