Bernoulli's error in Politics

Bernoulli wrote a famous paper in 1738, about the expected utility of sending a cargo of spice from amsterdam to st.petersburg, if the cargo arrived safely, the sender will find their wealth increased, however, there are chances that the cargo will be lost as well. Daniel Kahneman from Berkeley shows that this is not the way people made their decision, First, mankind tend to be biased in short term focus, they will be much more risk averse for short run losses, and much less risk averse for long term expected outcome (in this case wealth). Second, people tend to have over-confidence of gain in something they don't know nothing at all.
the drama in national awakening party precisely shown both cases, both parties under disputes seems to care too much in their ability to control others, afraid of losing in the face of their own fanatic supporters, but care very less in losing in the national election next year. They prefer to focus on short term risk than long term gain, as the disputes made non-traditional supporters look another way in the coming election. The increasing uncertainty in probability of winning also seems to validate the nobel laureate hypothesis, as people assign much higher probability of truth in their opinion than is warranted , not only in the short run they are risk averse, they also believe that they are the potential absolute winner. Which in many cases proven to be another way around

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M said...

OOT

tadi liat di BBC, Thailand is the biggest exporter in the world. ha???

bahas dong di.

Rajawali Muda said...

bener bener gak demen ya kalo gua lagi bahas the economics expalanation of PKB's elite behavior?

;-)

Rajawali Muda said...

gue cuma nemu biggest rice exporter in the world di BBC,link nya mana ya?
greatest exporter in the world kalo kita liat level of heterogeneity of exports, pasti china yang banyak (ekspor ke OECD countries) kalo dari besaran ekspor dari segi nilai, kalo ga salah si Amrik dan Jerman paling besar, karena level tech nya tinggi.
I'll check the precise data, but where's the link?

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