Foresight’s shortcomings

People tend to predict the future based on what they know, what is commonplace and what is significant. When e.g. estimating the time to get to the concert hall, they will frequently think about the drive to the hall only, i.e. disregarding the time to put on clothes, turn off everything at home, lock the door, call the elevator, notice its jammed, use the stairs, go outside, drive slower because it’s raining heavily and finally walk for 300 meters to the hall. There is a reason we don’t think about it this way: we would never get anywhere breaking each process into too many details and considering a large number of individual rare but possible events because it takes too much attention and energy and frankly, we don’t have the minds to do it well without tools. So people are frequently late – but that is probably one of the more benign consequences of this phenomenon.

Leaving that aside for a minute, a famous psychologist, Daniel Gilbert, vividly described another phenomenon. There’s an offer for a trip to Hawaii for 2000 dollars, he says, and it is on sale for 1600. Would you take it? Most people say they would (for reasons not important here). In a slightly different version of the experiment, the sale price is 700. You take a week to think it over and decide you would take it, but by that time, the sale is for 1500 dollars. Would you buy it? Most people say no, “there’s no way I’m paying 1500 for something that cost 700 last week”. The result is probably not surprising, but the consequences might be.

What do these stories have to do with each other?