1 Bird at Hand or 10 birds at the Forest?

If two statistically similar rewards to available for people to choose: one is 1 million dollars with 100% probability to win and another one is 2 million dollars with 50% probability to won. Almost all people will take the 1 million with 100% probability to win. That was one of the discussions in the Beida Alumni meeting. Charlie Tian quoted a saying that one bird at hand is better than ten birds at the forest (一鸟在手胜于十鸟在林). Most people there agree with this wisdom.

In another situation as in casino games, almost all games from slot machine to Black Jack have similar winning probability of 50% for double pay. That is statistically equivalent to the million dollar case. But people are willing to spend the one dollar at hand for the 50% chance to win the two dollars.

In these two occasions, people’s ways of thinking are almost the opposite. Tao AN, who is another graduate of Beida theoretical physics department, explained that might be related to the immeasurable principle of quantum physics. Thought itself might be part of the logic.

In stock market the behaviors of greed and fear are another example of such two opposite ways of thinking among investors. The logic of thinking at the two extreme ends can be very different or sometime opposite.