“Nobody is crazy.”
The other day, class started with this brief phrase. Immediately, I began to think about times when I have seen people act a bit absurd, doing things I would never even think to do, or times when even I have acted “crazy.” However, when the phrase was then outlined by the idea that no one, typically, acts out of full irrationality, but instead by the pressure of the circumstance, my mindset began to shift.
We then moved into an example. There is a jar full of 100 balls: 50 red and 50 black. How much money would you pay to correctly guess what color you were going to draw, picking said ball, and ultimately winning the $100 prize? Among many others, my first thought was “No more than $10. Why would I want to lose any money?”. Upon discussion, we quickly came to realize that, assuming you want a profit, you should pay $49 because you have a 50% chance of winning. Those of us who said we would pay very low prices are what one would call “risk averse,” meaning that we do not like taking on risk, preferring stable and reliable options instead, such as paying very little or not playing the game at all.
Risk is a randomness that can be measured; uncertainty is not. I understand the risk of losing however much money I may pay to play the game, or that there is a pure 50% chance of winning, but the uncertainty of not knowing whether I am going to pick the right ball and win is enough to curb me from even attempting to play. Anyone who is willing to pay $49 still seemed “crazy” to me, but I likely seemed irrational to them.
My thought process is a prime example of prospect theory, an idea created by Daniel Kahneman and Amos Tversky that speaks to the notion of humans valuing gains and losses disproportionately. Another example would be that we are likely to feel worse about dropping $20 on the ground than we would be happy to find $20. In other words, we evaluate the outcome of a situation based on its relative utility over its absolute utility (Pilat D., & Sekoul K., 2021). We already planned on using those $20, but now that we do not have it, it forms a cloud over our head. In the other scenario, we had no intention of finding $20 and will likely spend it flippantly without letting it guide the course of our day.
My general aversion to risk extends beyond just the ball game. I tend to play it “safe”. I’m a creature of habit who likes to stick to her routine and what she knows. I need my success to be guaranteed in a way, avoiding taking “crazy” chances and opting for an opportunity that I know will work out for me. I have always enjoyed being in this bubble, but after this discussion about risk, it popped, leaving me wondering “What have I been missing out on?”. If I choose the same options repeatedly, what doors am I closing? What experiences, connections, or growth might I be missing out on?
I would not say this mindset is bad, rather it protects me from reckless decisions and makes me feel grounded in my choices. However, too much caution can be just as costly and dangerous as recklessness. Rather than regret, the loss is measured in “What if?”, a question which can never be answered because I never allowed myself to try.
All this to say, I am not as good at making decisions as I thought I was. My risk aversion helps me to feel safe and in control of situations, but I am realizing it may make my life stagnant.
Beyond fiscal means and ball games, I can be closed off socially. I am not typically the first to jump to meet someone new or to take on a leadership role, even when encouraged repeatedly. I have a fear of making a fool of myself, being rejected by either another person or for the role or leaving the general experience entirely unfulfilled. This fear did not always linger; I was quite the social butterfly earlier in college, but I have noticed how comfortable I have gotten with where I am. I like the people I keep around myself; I feel stable with my role and reputation. Why bother with someone or something that could throw that off balance? In doing so, I feel like I am effectively avoiding possible stress and protecting my emotions. But the issue with this is that I am making decisions based on what I am feeling rather than thinking, or even daydreaming. Imagine if I did take that opportunity to go up to that person or to apply for that position. Where would I be now? When the “what if?” is brought to light, it can be plaguing. I now think back to all the times I chose to play it safe and wonder where I might be now had I made different decisions.
Allow me to be transparent. I am grateful for the choices that I have made in life, good or bad, and I am content with where I am and who I know. However, I am no longer going to allow my fear, or my aversion to risk, to hinder any more decisions. I am going to start saying “yes” to opportunities I may typically avoid, even if they are uncomfortable. I am going to face any failures as a chance to reframe. I have never gone through a bad time in my life and regretted it, but rather recognized how it has allowed me to grow. I am now going to think about things, instead of just how I feel, relying on my logic and ultimately balancing my safety with growth.
Learning to step into uncertainty, the gray areas of life, may just be the most important risk I ever take.