Predicting Behaviours

Remember: people do not act in rational ways. Thus to predict behaviours and reactions is not easy.

i) people choosing not to save for old age by spending their superannuation quickly after retirement

ii) exposing themselves to addictive substances, ie get short-term "kick" but long-term problem, eg smoking cigarettes (additive nicotine and other health issues like cancer, heart, diabetes, etc)

iii) people sunbaking to become tanned in the short term but exposing themselves to risk of skin cancer in the long term

Risk homeostasis (under certain circumstances, changes that appear to make a system for an organisation safer in fact do not). The rationale for this is that we have a fundamental tendency to compensate for low risk in one area by taking greater risk in another. For example, the introduction of childproof lids on medicine bottles led to a substantial increase in fatal child poisoning. The reason for this was that adults became less careful in keeping medicine bottles out of the reach of children. But it can work in an opposite direction. In the late 1960s, Sweden changed from driving on the left-hand side of the road to driving on the right. This was expected to increase the accident rate. In fact, initially road fatalities dropped by 17 percent because people drove more carefully to compensate for their unfamiliarity with the new traffic patterns

Unexpected events that have negative impacts happen more quickly than those that have positive impacts. Furthermore, the unexpected events provide an exploitative opportunity for entrepreneurs.

(As an aside, research has shown that venture capitalists, and not the entrepreneurs, make all the money!!!!!!)

As there are many subtleties, including chance, there is an asymmetry between using the past to determine the future. Owing to this introspective defect, we incorrectly think of tomorrow as a projection of another yesterday. Furthermore, a small input in a complex system can lead to large non-random consequences, depending upon the initial conditions, etc

 

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