Ah, it appears that I'm mixing up identities as well. Apologies.

Yes, I retract the "variance greater than 5". I think it would have to be variance of at least 10,000 for this method to work properly. I do suspect that this method is similar to decision-making processes real humans use (optimizing the median outcome of their lives), but when you have one or two very important decisions instead of many routine decisions, methods that work for many small decisions don't work so well.

If, instead of optimizing for the median outcome, you optimized for the average of outcomes within 3 standard deviations of the median, I suspect you would come up with a decision outcome quite close to what people actually use (ignoring very small chances of very high risk or reward).