Listening to The Arthur Brooks Show episode that dealt with Romantic Entrepreneurship, it struck me that the concept had parallels in gambling. If you haven’t listened to it, Brooks makes the case for being riskier in love-affairs. Now, I’m no relationship expert, but I do love bringing maths to every aspect of life, so here we go.
Long Term views to Escape Risk Aversion
In Thinking, Fast and Slow
Daniel Kahneman discusses the concept of Risk Aversion
. He admits that the possibility of losing is painful, and understands why people are risk-averse. Later in the book though, he explains why risk aversion is a poor strategy.
Making a single decision, it’s easy to be risk-averse. If you have a 55% chance to win 1000$ and a 45% chance to lose 1000$, why take the chance? If presented with the same bet 100 times in a row, however, you’d go for it. It’s easy to see that the average of the bet is good, and after 100 repetitions of the gamble, you’ll likely be on top.
No one asks you to take 100 bets in a row. Throughout your life though, more than 100 bets with favorable odds will present themselves. Considering each bet in isolation, it’s easy to be risk-averse. Adopting a guideline to always take favorable bets (unless they’ll ruin you), however, will ensure maximum gains. By adopting this broad framing, you’ll always see gambles as a part of a larger series, and accept losses as a necessary part of acting rationally.
Kahneman calls these guidelines risk policies. He offers the example of never taking extended warranties. Sure, some products will break and it will cost you. But in the long run, not taking the warranties will leave you with more money in your pocket.
Here is where it gets tricky. You like someone, and you suspect the feeling is mutual. Let’s assume there is a 40% chance they’ll go out with you. The force acting against you is stronger than risk aversion – it’s the fear of rejection.
The odds are not in your favor, but the positive outcome is much greater than the negative, so the bet has a good expected value. The chance of the one you fancy saying no is there, and it will hurt. Adopting the broad frame of your whole life though, it’s easy to see why you should take the gamble. Some people will say no, but some will say yes. The expected value over your whole life is short term pain from rejection + potentially life-altering dates.
Following Kahneman’s example, therefore, we should adopt a risk policy to ensure rational choices. Here’s the easiest one: Always ask someone you like out if you think there is any chance they’ll say yes.
Just do it
Adopting a risk policy concerning love is, I believe, the rational choice. It’s the way to escape your short term feelings in favor of your long term well being. There is nothing romantic here, love won’t always win or whatever they say. It’s purely rational: The expected value of asking someone out is good. You’ll most likely do it multiple times in your life, so you’re better of taking the bet. Be rational, just do it.