From Skin Care to Transportation: The Fourfold Pattern and Everyday Decisions

I believe that one of the most exciting aspects of reading non-fiction books, especially those that propose their own theories, is the opportunity to compare those theories with reality. One such concept is The Fourfold Pattern from the book Thinking, Fast and Slow by Kahneman (2011). I won't discuss the concept in detail in this article, but I will describe a real example that I experienced myself after reading about it.

In short, The Fourfold Pattern maps human attitudes towards risk in different scenarios. There are two probabilities (high and low) and two outcomes (gains and losses) that are mapped. Let's focus on the lower quadranta

The lower left quadrant describes a situation where there is a small chance of obtaining a large gain, such as a 5% chance of winning a $10,000 prize. This situation creates an expectation of a large gain, triggering a risk-seeking attitude. This is evident in the behavior of those who buy lottery tickets, who know that the chances of winning are slim but are willing to take the risk for the possibility of a large gain.

The lower right quadrant describes a situation where there is a small chance of incurring a large loss, such as a 5% chance of losing $10,000. This situation creates a fear of a large loss, triggering a risk-averse attitude. This is evident in the behavior of those who buy insurance, who know that the risk of a given event (such as a fire) is relatively small but are willing to pay a premium to eliminate the risk of a large loss.

An interesting event occurred a few days ago. Out of nowhere, a pimple appeared on my forehead (I suspect someone missed me LOL). Removing this pimple was important because I had plans to meet (read: party) with some friends in Block M Area. Therefore, I looked for an instant solution: an acne patch. I rushed to Guardian - a popular drugstore brand here - which was 25 minutes away. After 15 minutes of Gojek-ing in 29-degree Celsius air and super hot wind, I thought to myself, "Why rush to buy an acne patch? Why not wait until tomorrow when the weather is better? Besides, using an acne patch may not necessarily solve the problem." That's when I realized the phenomenon of The Fourfold Pattern.

In this case, there is a low probability that an acne patch will solve this pimple problem (gains). This condition triggered me to become risk-seeking, walking in the cold and windy air.

The process of enlightenment did not stop there. After purchasing the desired product, I decided to go home using the Transjakarta bus. Due to a miscalculation, the bus was scheduled to arrive in 20 minutes. The bus stop was very quiet, accompanied only by the brightness of the lights and the sound of the wind creeping through the open corners of the blue-colored buildings. The emptiness of the place made me walk around the bus stop. Strangely, my heart didn't feel calm. Every 30 seconds, I looked at the bus stop to make sure the bus hadn't arrived yet. Every 3 minutes of walking, I decided to turn back to the bus stop because I was afraid of missing the bus (then, after returning and seeing that there was no bus, I ordered Gojek the other way). That's when I realized the phenomenon of The Fourfold Pattern.

In this case, there was a small probability (low probabilities) that I would miss the bus (losses). This condition triggered me to become risk averse, feeling anxious and returning to the bus stop every three minutes. This may have been exacerbated by imagining one episode of Spongebob where he missed the bus that appeared every time he walked away from the bus stop.

Why is this important? Kahneman (2011) explains that a person's risk attitude in different situations can lead them to make suboptimal decisions. In this case, the suboptimal decisions I made were: (1) forcing myself to buy an acne patch in bad weather and (2) returning to the bus stop even though the arrival time was still far away. Was this my mistake? This question is difficult to answer because various studies show that The Fourfold Pattern occurs in the majority of the population. At least, by being aware of this psychological phenomenon, I hope to make more optimal decisions in the future.

Note: I highly recommend the book Thinking, Fast and Slow (Kahneman, 2011) for friends who are interested in economic psychology. This book explains how human decision-making is often not based solely on economic factors, contrary to the assumption that humans are rational economic creatures. For those who have read the book and want to talk about it, please feel free to hit me up!