Are we bad statisticians?
The idea of a "statistician's brain", present from birth, supports Laplace's view that "the theory of probabilities [...] makes us appreciate with exactitude what just minds feel by a sort of instinct, without them often being able to realize it". According to this hypothesis, we would all be endowed with an intuition of plausibility, based on complex, non-conscious Bayesian calculations. However, this perspective is in direct opposition to the work of Amos Tversky and Daniel Kahneman, for whom humans are poor statisticians. "It is generally agreed that rational choices must satisfy elementary criteria of consistency," they write in their famous Science article (1981); "In this paper we describe decision problems in which people systematically violate these criteria."
Extending Allais's paradox (1953), Tverky and Kahneman show that human judgments sometimes deviate massively from rational choice theory. They account for their empirical observations by proposing a prospecttheory, which departs from Bayesian optimality in several respects: (1) gains and losses are not absolute, but relative to aframe of reference; (2) decisions maximize the expectation of subjective value; (3) the subjective value function is concave for gains, convex for losses; (4) probability is weighted according to an inverted-S function that overestimates small probabilities and underestimates large ones.