Dylan Evans defines Risk Intelligence (RI) as the ability to correctly assess likelihood that something is true. Our RI measures the success we should have in dealing with future events, which by definition are uncertain. The problem we have as humans with risk management are the tricks our mind plays on us and the effects of social stimuli.
The Ebbinghaus Illusion is one of many psychological flaws that cause us to "see" things differently than they really are. Research shows that the moon is actually the same size at all positions in the sky but appears larger or smaller depending on its surroundings. That is, when an object is surrounded by larger objects, then the focal object appears smaller than it does when it is surrounded by smaller objects.
Another heuristic that biases our predicting the likelihood of an event is "availability." That is, if we have heard about something often and can recall it easily then we place a higher likelihood that event will occur than if we have trouble recalling previous occurrence. This phenomena is particularly "messed up" because of the exposure we have to mass media who control the frequency of events we hear about.
Optimism bias influences us by placing a higher probability on what we wish to happen than on what we don't. This is particularly active in the formation of "bubbles" where there becomes a greater bet on events to continue (such as stock market rising) than probabilities merit.
Confirmation bias occurs when we pay more attention to information that supports what we expect or want to occur than other data that does not. People tend to reach conclusions that fit their thinking and then collect and analyze data to confirm their conclusion than to carefully consider evidence to help them form their conclusion.
Beyond the individual biases that reduce our Risk Intelligence, there is also the "madness of crowds." Social forces promote over confidence, deferring to the "blirtatious" (considering those that are quick to speak up as the smart ones), the ""majority effect" (follow the crowd), and ambiguous communication.
This is just a brief nod to the many influences that reduce our ability to assess risks in the midst of uncertainty. This has implications for countries that go to war and for individuals that pick a college, buy a house, choose a spouse, or take a job. All decisions have risk because the future is uncertain. How we minimize infleunces that constrain our ability to assess risk effectively improves the chances our choices work for us and not against us.
Certainly something worth pondering ......
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