Posts Tagged ‘Risk’

Reframing Charlie Hebdo

February 22, 2015

By Anjum Altaf in Economic and Political Weekly

My professional life has involved study of the attitude of individuals towards risk and it is this perspective that I employ to reflect on some aspects of the Charlie Hebdo affair.

My interest in the subject emerged in graduate school when I found it increasingly difficult to reconcile the idealized behavior described in Western textbooks of economics with actual behavior I had observed in South Asia. My conclusion was that context mattered much more than acknowledged, followed very quickly by the realization that context was not constant.

One implication was that attitude towards risk was not a genetic trait – people were not born risk averse or risk preferring – but a behavioral response to specific contexts. I became convinced of this when my thesis adviser mentioned all the radical things he would do once he was awarded tenure.

Not only that, there was no one attitude to risk. Behavior has a fascinating multi-dimensionality in which a person could be cautious along one dimension and reckless along another – think of a chain-smoking miser as an example.

Every context or situation poses certain risks – even the crossing of a street – and individuals decide how much risk they are willing to take in that particular situation to achieve whatever might be their objective at the time.

(This inference is subject to a qualification that is generally missing in Western textbooks: The choice of how much risk to take is not always voluntary – many people are forced to take involuntary risks simply in order to survive – think of workers who descend underground to clean sewerage pipes or ascend flimsy scaffolds to construct buildings.)

In this perspective the editors at Charlie Hebdo either misread the context in publishing the material they did or they knew the risk they were incurring and felt it was worth taking to achieve the kind of world they believed in. If the latter, they were seemingly no different from the many journalists who risk being tortured and killed by intelligence agencies or the students who protest knowing they could well join the Disappeared. Except that the latter act in local contexts while the former were doing so in one that was truly global.

Framing the Charlie Hebdo affair as one of freedom of speech ignores the real world in which we live in favor of a normative one that validates a particular set of values. This introduces a complication that we discount at our peril. For very long most of our actions were confined to local domains where people were aware of prevalent values and had been part of the shared experience in which they had evolved. Today the audience for many actions is global throwing together people who subscribe to very different sets of values. In such a world our objectives and the risks we take to promote them are both confounded and compounded to an extent that calls for careful reconsideration.

Let us assume we subscribe to freedom of speech as a desired end for all but exist in a world with two groups: The majority in one group holds the value of free speech sacrosanct while the majority in the other assigns that status to the value of respect. Both sides contain minorities prepared to exploit the clash of values for political ends. That’s the way it is – nothing much is gained by labeling one group enlightened and the other unenlightened.

Let us assume further that the self-proclaimed enlightened group wishes to engage the alleged unenlightened one to move it towards the objective of recognizing the supreme value of free speech. Would it make sense to initiate the engagement with a gesture of disrespect trammeling the very value that would provide an entry point for reasoned discourse? The fact that anti-clericalism is a venerated French tradition carries no weight, rightly or wrongly, for the audience that is not French. To demand an engagement according to one’s values comes across as a losing proposition from the outset.

It seems reasonable to suggest that an appreciation of the context, no matter how much one might dislike it, ought to govern the nature of cross-cultural engagement. It should also have a bearing on the extent of risks that need to be taken to move that engagement in the desired direction.

Of course, it is ultimately the free choice of individuals how much risk they are prepared to take at any particular time for what they believe in. What one cannot do is wish away the reality that we live in a world comprised of people with fundamental disagreements on how life is to be lived and by what rules. There must be a better way to move closer together than to enter into excessively risky confrontations with unpredictable outcomes.

Anjum Altaf is the provost at Habib University. This reflection appeared in the Economic and Political Weekly on February 21, 2015 and is excerpted here with permission of the author.

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Cricket: Risk, Strategy, Design

March 26, 2011

By Anjum Altaf

Cricket is emblematic of South Asia. It distinguishes the region qua region from almost anywhere else – East Asia, West Asia, Africa, the Americas, Europe. So at this time when three of the four teams in the World Cup semifinals are South Asian, it is opportune to wrap some thoughts about risk, strategy and design in the metaphor of cricket.

In an earlier article (Achievement and Risk-taking) written quite some time back, I had used illustrations from cricket to make the point that the propensity of an individual to take risks is not a function of personality but an outcome of strategic calculation. In other words, individuals are not born with a given attitude towards risk; they can decide when it makes sense to be cautious or bold.

I have now found an academic presentation of this perspective. In A Primer on Decision Making, James March, a leading authority in the field, frames risky behavior as a reasoned choice:

Individuals can be imagined as rationally calculating what level of risk they think would serve them best. Consider, for example, risk-taking strategy in a competitive situation where relative position makes a difference. Suppose that someone wishes to finish first, and everything else is irrelevant. Such an individual might want to choose a level of risk that maximizes the chance of finishing first. In general, strategies for maximizing the chance of finishing first are quite different from strategies for maximizing expected value.

An extreme example would make this clearer. If winning a particular contest were all that mattered, an individual might take the gamble of cheating. If the long-term reputation mattered more, the risk calculus would change reducing the attraction to cheat.

The example that March to illustrate his point uses leads naturally into the nature of the distinction between the longer and shorter versions of cricket:

Suppose one were challenged to a tennis match and given the option of specifying the number of points in the match. Given a choice, how long a game would a rational tennis player choose to play, assuming that the length of the game itself had no intrinsic value? The key to answering this question depends both on the probability of winning any particular point and on the length of the game. As the length of the game increases, the better player is more and more likely to win, because the variability in outcomes declines with “sample” size (relatively rapidly, in fact). The game’s outcome becomes more and more certain, less and less risky.

It should be clear immediately that less skilled players would prefer a game of chance (Trumps) to a game of skill (Bridge). Similarly, weaker teams or teams that rely less on strategy and more on chance would prefer a shorter duration game to a longer one. As one example, the Pakistan cricket team fancies its chances most in 20-20 games, less in 50-over Internationals and least in five-day Tests. If there were one-over games, the prospects of almost all the teams would even out because chance would dominate average performance or strategy. Six sixes or three wickets in an over would likely decide the fate of a 20-20 game but might just be a blip in a five-day Test.

[Of course, once one moves from individuals to teams (tennis to cricket) a whole new dimension of team dynamics comes into play. This is a different subject but suffice it to say that the 2011 World Cup is after a very long time that the Pakistani team is not torn apart by side-betting, personal rivalries, provincial dissensions, or biased selections which makes it even possible to sensibly discuss its prospects or strategies as a team.]

This brings us to the issue of the design and format of competitions. Given that an ODI is so much more dependent on chance than on average performance, the prospect of upsets is that much increased. On any given day Ireland can upset Pakistan or Bangladesh can upset India. This despite the fact that a best-of-five series between the pairs should leave no doubt as to which team has the better record at the time.

Therefore, to structure a competition comprising teams of vastly different strengths entirely around one-off contests would leave too much to chance. The design is not conducive for a competition that aims to determine the ‘best’ and not the ‘luckiest’ team in a particular form of the game. Thus in the last World Cup both Pakistan and India were knocked out by teams that they would otherwise have defeated nine times out of ten.

In this sense, the two-stage format of the 2011 World Cup is a definite design improvement. The first stage is a Round-Robin format where a team has to prove its merit not by one chance win but by a sustained record of success. The format ensures that it is truly the weak teams that are eliminated in the first stage. This objective was accomplished in the on-going competition where it is (almost) generally agreed that the eight best teams made it into the quarterfinals. From there on, it is a knock-out format between the final eight but again designed intelligently so that the stronger teams of one group are matched against the weaker ones of the second group thereby giving a premium to performance.

Needless to say, each version of cricket calls for a different set of skills and capacities. The five-day Test puts a premium on average abilities, many individual contributions, and teamwork while a 20-20 match can turn on one stellar performance. It is the in-between format, the 50-over ODI, which calls for a combination of an outstanding contribution, quick thinking on the feet, calculated gambles, and, crucially, the minimization of error. The ODI is perhaps the most unforgiving of error. One missed catch, stumping or run out would not affect the outcome of a 20-20 and could be made up for in a Test, but it could be all the difference in an ODI.

Readers will guess this is all nervous babble before the big semifinals. Sri Lanka should win (New Zealand having upset a stronger South Africa) but the India-Pakistan game is impossible to call. On past performance India is the better team but Pakistan is fired up by the shock of its own rebirth. Good luck to all the teams – the ones that avoid the crucial error will win. But South Asia has the World Cup in its grasp and as South Asians we are already celebrating.

It would be interesting if readers write in with their recommended gambles and strategic adaptations for any of the four teams in the semifinals.

 

Achievement and Risk-taking

June 20, 2010

By Anjum Altaf

We are reproducing, with slight changes, an article that discusses popular myths about the behavioral attributes of high-achievers. The objective is to show that some inherent and constant disposition is not a defining variable in achievement.

A recent article titled ‘Successful risk-takers’ advised readers to take only moderate risks if they wanted to be high-achievers. Before you follow the advice, imagine that you meet an old high school friend with whom you used to do the most risky things, and you suggest repeating them for old-times sakes. How likely are you to be told that he couldn’t because he was now a respectable married man with a young daughter to care for? If you have experienced the above, or find it plausible, you can conclude that the amount of risk people take depends upon circumstances. And that conclusion can be the starting point of an argument with the theory presented in the article. (more…)