We all assume our actions reflect our preferences for risky or safe behaviors. Some people focus on the potential payoff of bets. Others take comfort in safe behaviors that help us avoid risks. But how do these preferences play out in our everyday lives? And how can we better understand our tendency to take or avoid risks in different situations?

This exhibit asks visitors to consider how they would behave in two imaginary scenarios: winning a charity raffle, and making an investment that takes a bad turn.

Images from the Exhibit

Couple learning about the exhibit from a guide
Closeup of a hand moving a peg
Couple learning about the exhibit from a guide

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Further Readings: The Science behind the Exhibit

Human beings tend to be especially averse to losses. The anticipated pain of losing a given amount typically feels about two times worse than the joy of gaining the same amount. As a result, we are especially concerned about potential losses, and the urge to avoid those losses tempts us to take unwise risks. The way that outcomes are presented influences the choices we ultimately make. To think clearly about risk, try reframing losses in terms of gains (and vice versa) to have a more balanced view of your possible outcomes.

  • Kahneman, D., & Tversky, A. (1979). Prospect Theory: An Analysis of Decision under Risk. Econometrica, 47(2), 263.
  • Barberis, N. C. (2013). Thirty years of prospect theory in economics: A review and assessment. Journal of Economic Perspectives, 27(1), 17396.
  • Chiu, A., & Wu, G. (2010). Prospect theory. Wiley Encyclopedia of Operations Research and Management Science.
  • Sussman, A. B. (2017). Valence in context: Asymmetric reactions to realized gains and losses. Journal of Experimental Psychology: General, 146(3), 376–394.
  • Allen, E. J., Dechow, P. M., Pope, D. G., & Wu, G. (2017). Reference-dependent preferences: Evidence from marathon runners. Management Science, 63(6), 165772.

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