On Hreha On Behavioral Economics

Source: Astral Codex Ten
by Scott Alexander

“My medical school had final exams made of true-false questions, with an option to answer ‘don’t know.’ They were scored like so: if you got it right, +1 point; wrong, -0.5 points; don’t know, 0. You can easily confirm that it’s always worth guessing even if you genuinely don’t know the answer (+0.25 points on average instead of 0). … when I talked about this with friends — smart people, the sort of people who got into medical school! — none of them guessed, and no matter how much I argued with them they refused to start. The average medical student would sell their soul for 7.5% higher grades on standardized tests — but this was a step too far. This is Behavioral Econ 101 stuff — risk aversion, loss aversion, and prospect theory. If it’s true, the core of behavioral economics is salvageable.” (08/30/21)