We asked participants in an experiment: “You are on vacation in a foreign country and are considering flying a local airline to see a special island. Safety statistics show that, on average, there has been one crash every 1,000 years on this airline. It is unlikely you’ll visit this part of the world again. Would you take the flight?” All the respondents said they would.
We then changed the second sentence so it read: “Safety statistics show that, on average, one in 1,000 flights on this airline has crashed.” Only 70% of the sample said they would take the flight. In both cases, the chance of a crash is 1 in 1,000; the latter formulation simply sounds more risky.
One crash every 1,000 years is only the same as one crash in 1,000 flights if there’s exactly one flight per year on average. I guess they must have stipulated that in the experiment (of which there’s no citation), because otherwise it’s perfectly rational to suppose the first option is safer (since generally an airline serves >1 flight per year)?
I’m really confused by this passage from The Six Mistakes Executives Make in Risk Management (Taleb, Goldstein, Spitznagel):
One crash every 1,000 years is only the same as one crash in 1,000 flights if there’s exactly one flight per year on average. I guess they must have stipulated that in the experiment (of which there’s no citation), because otherwise it’s perfectly rational to suppose the first option is safer (since generally an airline serves >1 flight per year)?