I just listened to a Planet Money story that I wanted to share with you. It’s a 4:26 long discussion of risk aversion and how some experts see it distorting the American housing market. I’m not recommending it because I think you need to be thinking about the housing market, though. I’m posting this because the whole time I was listening, I was thinking about the psychology involved in guessing on the SAT. To paraphrase one expert in the story, people are afraid to guess because losing feels more intensely bad than winning feels good.
I actually think the SAT is a better application of the theory in question than the housing market, since home buyers and sellers generally don’t get to buy and sell often enough for the “if you flip the coin 1000 times” argument to really make sense.
On the SAT, you lose 1/4 of a point for an incorrect answer, and gain a whole point for a correct one. Since there are 5 choices per question, if you are deciding whether to guess or leave a question blank more than a few times per test, you’re in a position where, statistically, random guessing is a complete wash (thorough explanation here). From there, if you feel like your guess is even a little bit better than random, the “rational” move is to guess, since the scales tip slightly in you favor once you eliminate even one incorrect choice.
I’m not saying you need to guess, but listen to the story, and see if any of it resonates with you. It may or may not inform your future guessing strategy on the SAT.
Can’t wait to listen….