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DanielLC comments on Open Thread for January 17 - 23 2014 - Less Wrong Discussion
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Overconfidence bias causes people to give more extreme probabilities than the should. Risk aversion means that people don't accept risks without higher-than-necessary confidence. Isn't this the same as saying that people are about as confident and risk-taking as they should be, and they just suck at reading and writing probability?
I think risk aversion means that people treat an event differently based on whether they model it with loss and gains.
The aversion is different if it's a loss or a gain, which shows that you can't entirely fix to problem by renumbering the probabilities, but people are averse to loss either way.
Although that makes me wonder: does confidence change based on whether it's modeled as a loss or a gain?