Dylan Evans Risk Intelligence How To Live With Uncertainty Atlantic Books (2013)

Risk Intelligence ALSO BY DYLAN EVANS Placebo: Mind over Matter in Modern Medicine Emotion: The Science of Sentiment Introducing Evolutionary Psychology Introducing Evolution An Introductory Dictionary of Lacanian Psychoanalysis First published in the United States in 2012 by Free Press, a division of Simon & Schuster Inc., New York. Published in trade paperback in Great Britain in 2012 by Atlantic Books, an imprint of Atlantic Books Ltd. Copyright © Dylan Evans, 2012 The moral right of Dylan Evans to be identified as the author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act of 1988. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior permission of both the copyright owner and the above publisher of this book. Every effort has been made to trace or contact all copyright holders. The publishers will be pleased to make good any omissions or rectify any mistakes brought to their attention at the earliest opportunity. 10 9 8 7 6 5 4 3 2 1 A CIP catalogue record for this book is available from the British Library. Trade paperback ISBN: 978 1 84887 738 2 eISBN: 978 0 85789 926 2 Printed in Great Britain [printer fills in their details here]. Atlantic Books An Imprint of Atlantic Books Ltd Ormond House 26–27 Boswell Street London WC1N 3JZ www.atlantic-books.co.uk To Louise, who took the risk of marrying me CONTENTS Chapter One: Why Risk Intelligence Matters Chapter Two: Discovering Your Risk Quotient Chapter Three: Into The Twilight Zone Chapter Four: Tricks of the Mind Chapter Five: The Madness of Crowds Chapter Six: Thinking by Numbers Chapter Seven: Weighing the Probable Chapter Eight: How to Gamble and Win Chapter Nine: Knowing What You Know Acknowledgments Appendix 1: Risk Intelligence Test Appendix 2: Personal Prediction Test Appendix 3: 2010 Prediction Game Appendix 4: Research Data Notes Index Note on the Author Risk Intelligence CHAPTER 1 Why Risk Intelligence Matters He who knows best, best knows how little he knows. —THOMAS JEFFERSON Kathryn, who is a detective, is good at spotting lies. While her colleagues seem to see them everywhere, she is more circumspect. When she’s interviewing a suspect, she doesn’t jump to conclusions. Instead she patiently looks for the telltale signs that suggest dishonesty. Even so, she is rarely 100 percent sure that she’s spotted a lie; it’s more often a question of tilting the scales one way or another, she says. Jamie is viewed as a bit of an oddball at the investment bank where he works. When everyone else is sure that prices will continue to go up, Jamie is often more skeptical. On the other hand, there are times when everyone else is pessimistic but Jamie is feeling quite bullish. Jamie and his colleagues are not always at odds, but when they disagree it tends to be Jamie who is right. Diane is overjoyed about her new relationship. When she phones her best friend, Evelyn, to tell her all about the new man in her life, Evelyn urges caution. “What’s the chance that you’ll still be with this guy in twelve months?” she asks, as she has done before. Diane’s reply is just as predictable. “Oh, ninety, maybe ninety-five percent,” she replies, as she always does. “I’m sure Danny is the one!” Two months later, she’s broken up again. Jeff has just been promoted to the rank of captain in the US Army. Since he is new to the role, he often feels unsure of his decisions and seeks out his colonel for a second opinion. The colonel is beginning to get rather tired of Jeff’s pestering him, and has taken