Why does a 30% chance feel like either zero or certainty?

Why this matters. You can know a probability and still not be able to feel it. The gap between the number you accept and the number you act on is where this course lives.

Thirty per cent is a real quantity. Sat with, it collapses: either it will not happen, or — once you begin to imagine it — it will.

What is documented

Replicated: people do not act on probabilities as stated. Small probabilities are treated as larger than they are, and large ones as smaller — the probability weighting function in Tversky and Kahneman's 1992 cumulative prospect theory.

This is the piece of prospect theory that belongs here rather than to Portfolio Management. PM teaches the value function — the asymmetry between gains and losses — in Loss aversion and the disposition effect. The weighting function is about how the probability itself is distorted, and it is first-person by nature: it describes the number you end up acting on.

Where it bites in markets

Two places, in opposite directions. A remote outcome — a gap, a failure, a shock — is felt as more likely than it is, especially just after one has happened. And a likely outcome is discounted: something with a strong chance of working is not felt as strong, so it gets under-committed relative to the stated view.

Both distortions are invisible from the inside, because what you have access to is the felt weight, not the stated one.

The artefact

Write the number before you act, then write what you did. Not a forecast — a record of the two things in the same place, so the distance between them becomes visible over time.

The distance is personal and reasonably stable. Yours is a fact about you, and it is discoverable only by writing both halves down.

Try it now

For your next view, write the probability you would state aloud. Then write what position size that probability justifies, and what you would actually do. If those differ, you have measured your own weighting.