Stuff To Blow Your Mind The Devil You Know, Part 2
Aug 28, 2025
Explore the intriguing concept of ambiguity aversion and how it influences our decision-making. Delve into the Ellsberg paradox and its implications in negotiations, including the intriguing madman theory. Discover the psychological factors behind risk perceptions and the quirky significance of everyday objects. Unravel the complexities of medical uncertainty and its role in vaccine hesitancy, while also examining how historical narratives and media influence our choices. And, of course, why are we so fascinated by zombie apocalypse scenarios?
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People Prefer Known Odds
- Ambiguity aversion is preferring known probabilities over unknown probabilities even without evidence the unknown is worse.
- People will pay to avoid ambiguity, though most real-life decisions are inherently ambiguous.
Ellsberg Paradox Upended Decision Theory
- Ellsberg's urn experiments revealed people prefer clear odds and produce self-contradictory choices called the Ellsberg paradox.
- This violated Savage's axioms and reshaped decision theory.
Madman Theory Example
- The Nixon White House's madman theory tried to exploit ambiguity aversion by appearing unpredictable to extract concessions.
- The hosts note researchers doubt its long-term effectiveness despite possible short-term wins.
