An Economist Walks Into a Brothel: And Other Unexpected Places to Understand Risk

by Allison Schrager

Suppose you are deciding whether or not to go on a date with someone you met on Tinder. Based on your extensive dating experience, you figure there’s a 5 percent chance the date will be a total bust. You will spend the whole time being lectured about some politically motivated conspiracy theory, alternating with subtle put-downs about your age and appearance. There is a 60 percent chance your date will be perfectly nice, but there will be no chemistry and awkward, strained conversation. There is a 30 percent chance you’ll like each other enough to date for three months and then break up and feel indifferent about it. And there’s a 5 percent chance the date will be amazing and you’ll walk away thinking you met the love of your life. Deciding whether or not to go on the date isn’t just a matter of 35 percent good versus 65 percent bad. If you look at it that way, you’ll never leave home. We have strong emotions attached to each potential outcome. How we feel about, or value, each possibility is what economists call utility. The prospect of a good relationship gives us so much joy, or lots of utility, we are willing to go on what will probably be a bad date.