Find Mediators Near You:

How Likely Am I to Win? Risk, Uncertainty & the Turkey Illusion

JAMS ADR Blog by Chris Poole

When parties are faced with an attractive settlement offer, they frequently wish to compare the offer to what they might get at trial, which is the product of the odds of winning times the value of the verdict or award.   Naturally, they ask their lawyer “how likely am I to win?”

What kind of answer is called for? Answers to questions like this come in two flavors.  Flavor one – you know the odds – is called decision-making under conditions of RISK.  Flavor two – you don’t know the odds – is called decision-making under conditions of UNCERTAINTY.  The two aren’t at all alike!  The first is more like a slot machine or a lottery.  The second is more like picking stocks, predicting earthquakes and making most business decisions.  Confusing the one for the other can be a disaster.

In his brilliant book Risk Savvy, How to Make Good Decisions, prolific author and scientist Gerd Gigerenzer describes the dangers of confusing one kind of decision with the other.  He says risks can be calculated when there is (1) low uncertainty – a predictable and stable situation (2) few alternatives – not too many factors to estimate (3) a high amount of data available to make these estimations.

However, since at least the 1700s, we’ve known that people prefer risky decisions to uncertain decisions – so much so that they will turn uncertain decisions into risky decisions in their minds, even when reality is different.  An example of this is the “turkey illusion.”

If you want to figure out what is likely to happen tomorrow, you can look at what’s happened in prior days.  If you are in the Gobi Desert and you want to know whether it will rain tomorrow, you can look at the prior day and the day before that, and that data will help you determine tomorrow’s weather.  This “rule of succession” means the past is predictive of the present.

But not for a turkey.  If every day the farmer feeds and pets the turkey, the turkey could calculate the odds starting with the fourth Friday in November and conclude “I’ve been fed and petted 159 days in a row – the odds of being fed and petted on the 160th day are 160/161 or 99+%.”  And that logic will hold true all the way to 364/365…and then Thanksgiving will come and the poor turkey will have logically concluded that morning that it has nothing to fear – because a savvy risk-taker would deem the odds of death as vanishingly small.

Gigerenzer attacks this topic from many vantage points. He analyzes leadership decisions and the work of CEOs (ch. 6), medical decisions and the ploys used by and on doctors (ch. 9), consumer decision-making and the effects of misleading ads (ch. 5) and more.  Each time, there are simple tips and rules of thumb to help navigate through these sometimes murky waters.

Can a lawyer predict with accuracy the outcome of a potential case? Let’s analyze that question further, together, in the days to come.  For now, I strongly recommend you go out, buy and read Risk Savvy.  It might just save your neck come Thanksgiving.

                        author

Richard Birke

Richard Birke is a JAMS consultant and has taught dispute resolution for more than 20 years. He is a law school professor and director of the Center for Dispute Resolution at Willamette. Under his leadership, CDR has enjoyed more than a decade of high national rankings in the US and is… MORE >

Featured Members

ad
View all

Read these next

Category

Foreclosure Mediation Program – Video

Court Clips, a video, informational program produced by the New Jersey Courts, explains the foreclosure mediation program. The programs facilitates mediations between lenders and homeowners. It is available to qualifying...

By New Jersey courts New Jersey
Category

Getting “the Good Stuff” from Feedback

  I confess that I have had a love-hate relationship with feedback. In my teaching and coaching, I am passionately committed to improving and growing. And, I always want to...

By Lorraine Segal
Category

It’s All About The Handshake

From the Mediation Matters Blog of Steve Mehta.As most mothers are oft to say — there is nothing like a good first impression. Well one of the first things in...

By Steve Mehta
×