“When you take the long view of many similar decisions, you can see that paying a premium to avoid a small risk of a large loss is costly. A similar analysis applies to each of the cells of the fourfold pattern: systematic deviations from expected value are costly in the long run – and this rule applies to both risk aversion and risk seeing. Consistent overweighting of improbable outcomes – a feature of intuitive decision making – eventually leads to inferior outcomes.”
