The Art of Thinking Clearly_Neglect of Probability

According to Chapter 26, "Neglect of Probability," people tend to overlook probability and instead place more emphasis on the event itself especially when it comes to lottery or stock investment. For example, many amateur investors evaluate their investments solely on the basis of the potential yield without giving due consideration to the risks involved. Also, when it comes to awareness of prevalent risk, they don't care whether something has as little as  1% risk or as much as 99% risk. They simply perceive the fact that there is a risk. Paradoxically, people tend to react quite strongly to the concept of 0% risk, even though this might seem illogical. They perceive that zero probability is always better despite its absurdity. 

I can relate to this tendency. When making a decision about which company to invest in, I usually get more affected by the news and trends rather than calculate the risk. Also, I stopped using the Nivea lip care product the minute I heard that it could cause cancer even though it had a low possibility. I tend to believe the things I can see, hear, and feel more easily than something I cannot foresee(probability of risk). But I think predicting risk can be helpful in making decisions and reducing damages in our lives. 

 However, I can help but think that it’s just a matter of destiny. When risk exists, it will happen regardless of the magnitude of its possibility. Imagine winning the lottery. There is a small possibility of winning but there is always a winner. Also, even though there are so many algorithms out there for predicting the stock price that factor in many elements of possibility, they easily fail to accurately predict the future stock price. That is, we cannot predict all the risks. Risks can also be caused by randomness. From a perspective of destiny, no matter how much probability exists, risks will manifest. While considering and predicting risk is important, only focusing on the risk and ways to avoid it could deprive you of the opportunity to win. So trusting your intuition and experience is also important when it comes to sizing new opportunities that we cannot foresee.