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Stephen Diamond's avatar

1) It's simply feels worse to think of yourself as failing/doing worse than it feels better to think of yourself as doing better.

This seems to be a redescription rather than an explanation.

2) In contrast to bankruptcy, cultures aren't protected from bad results.  Rather, too many individual failings amount to complete social collapse and so evolution favors avoiding downside risk.

I think group-selectionist hypotheses are disfavored these days by evolutionary biologists.

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Peter Gerdes's avatar

Or some other quick possible explanations.

1) It's simple feels worse to think of yourself as failing/doing worse than it feels better to think of yourself as doing better.

2) In contrast to bancruptcy cultures aren't protected from bad results.  Rather, too many individual failings amount to complete social collapse and so evolution favors avoiding downside risk.

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Can you test it?  Almost certainly not.  No one thinks we shouldn't be risk averse with our money since it's well known happiness is sub-linear in wealth.  The question is whether we are genuienly risk averse and if so why.

But one can easily prove that any Pareto optimal strategy can have a utility function perfectly fitted to it.  So short of a happiness/utility reader I despair of learning much about these questions beyond my priors by way of the usual economic experiments.  

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