The More Things Change...
The idea seems simple: we all make choices based on what we know. We buy a certain car because of the "less-than-a-year warranty" because we've seen it advertised as a better product, or choose to invest in property because we know that real estate is going up. But when considering things like cars, rentals, or purchases that happen with our money, how much more can there be than one possible outcome?
This premise is supported by an inevitable law of probability. We take into account the probabilities of every possible outcome for the chance of a better choice. Based on these, we make our choice. But what if there were more than one possible outcome? What if there were outcomes that have higher or lower probability than the one we took into consideration?
This is where gamblers lose their mind. They gamble because they believe they can beat the house by exploiting this theory. For example: say a gambler bets $10 on a roulette table and has to win at all costs to get back his money, and he has already landed on red once; he would be crazy enough to go again with his original bet. The chance he could lose that is only 37.5 percent, which means the probability of another red landing on a roulette table is 62.5 percent. So why not break even?
It turns out that the gambler is wrong in assuming that there would only be one payout or loss from his bet and then would be able to recover the money he had originally placed on the table. But in fact, both the possibility of landing on red again and the possibility of winning a payout would both occur at the same time. The gambler's mind is incapable of imagining how either one of them could occur, so he assumes that one or the other will take place.
The gambler cannot imagine that he would win and lose at the same time because his mind cannot conceive the idea, so he assumes it won't happen. But this is where people get caught up in their own little theory: that they can predict outcomes based on probabilities in their minds—but sometimes these probabilities are wrong, or one should say "higher" or "lower.
The probability of the gambler winning his bet is actually 100 percent: if he wins, he will break even. But the probability of his losing is also 100 percent: it's either a win or a loss, and it will land on red again. The probabilities alone do not tell you which one will occur.
We have a concept of an idea called "fuzziness" that helps us predict outcomes, but sometimes these predictions are off the mark. Fuzziness allows you to estimate something as being more certain than another. For example: getting a "great job opportunity" is evidently more certain than getting an "okay job opportunity. This is what we take into consideration when choosing the more promising out of the two.
But fuzziness does not translate well into the real world of monetary value. "A great job opportunity" may be worth $10,000 and an "okay job opportunity" may be worth nothing at all. In this case, they are not worth the same in monetary value, but they would both be considered to be possibilities that are more certain than another—even though they are actually not. Worthless is worth less than $10,000 (and perhaps nothing at all), and a great job opportunity might just be a con.
The problem of the gambler and the con artist is that they cannot be bothered to consider an outcome that would either make or break their chances of winning. People believe that there is a certain level of certainty in their choices, and when these have been shown to be false, it can really shake up the way they think about things and make them realize how little they actually know.
It can also cause them to consider every possibility before making a decision, including one that may never happen but never the less would have higher or lower probability than the one taken into account. The gambler can take into account this possibility, and consider where it gets him. If he does not win his bet, all he needs to do is go out and get another $10 with the same odds, gambling once more.
The con artist, on the other hand, would have to stop and consider what exactly she is doing to gain from people's belief in her lies—and if her lies were too obvious to believe without examining them for themselves. So while higher probability of a loss or penalty may be possible in one situation, it may not be worth the risk if there are too many other more realistic possibilities.
The other side of the coin is that the gambler's idea is not really an original or new one. The gambler assumes that there are only two possibilities: if he wins, he wins it all; if he loses, he breaks even. But there is a third possibility that he has not taken into consideration: winning and losing at the same time. And this third possibility (and its consequence of losing) should outweigh the probability of either one happening, because it will always happen—winning and losing both take place at once—no matter which way you go.
The problem here is that our minds are used to dealing with probabilities and can only imagine them as being certain or uncertain. But the reality is that a probability can be either one way or another, and so would be neither certain nor uncertain. This is why we cannot imagine something like a probability: It's simply not in our mind.
We have to accept this paradox and acknowledge that there are two possible levels of probability: lower and higher—and they can both take place at the same time. And although we may not want to think about it as much as the gambler, we also need to keep this in mind when gambling with our money. Those who know how can gamble with their odds of winning (or losing) but those who do not, should just avoid the game altogether.
About the author:
Brian Dunning is the founder of Skeptoid Media, a production company that creates educational videos and podcasts. He is also the host of The Skeptologists Podcast, a weekly internet audio show that critically examines pseudoscientific claims from a scientific point of view. Brian has been podcasting with Skeptoid Media since 2007, and has created over 300 hundred videos for YouTube about science and critical thinking. His videos have been viewed over 85 million times on every continent except Antarctica (though he still plans to go there someday).
Conclusion:
This is a critical thinking exercise to help you spot the difference between probabilities and possibilities, and also think about other aspects of what you are considering. It's not just about whether or not you calculate your own odds, it is also about determining your own probability based on what information you have at hand.