Trading On The Titanic Effect

Tim of Psy-Fi Blog discusses a phenomenon called the “Titanic Effect” in Trading On The Titanic Effect. The more we believe something can’t go wrong, the worse the disaster will be when it does. This is because we humans get complacent when we believe the risks are low and under control (e.g. regulations, safety devises, statistical probabilities), and we pay less attention.  That can lead to surprisingly bad outcomes. – Ilene  

Trading On The Titanic Effect

Courtesy of Tim of Psy-Fi Blog

Scary Tactics

If you’re sailing icy seas you’d generally want to keep a watchful eye open for icebergs. Unless, of course, you’re in an allegedly unsinkable ship, in which case you’d probably prefer to opt for a spot of partying and an early snooze on the poop deck instead. The craft’s designers will likely not have bothered with wasteful luxury items like lifebelts, emergency flares or lifeboats either: what would be the point?

You have, of course, just fallen foul of the Titanic Effect, one of a number of self-fulfilling behavioural biases where your expectations bias your behaviour and make it more likely that you’ll fall foul of the very problems you think you’ve overcome. Oddly, though, the problem suggests the solution: scare the living daylights out of the crew before you cast off.

Airbus Behavior

The calamity that was the sinking of the Titanic is, of course, the obvious example of such behaviour but there are plenty of others. Take, for instance, the Airbus 320. This aircraft, which is the same one that Chelsey Sullenberger successfully brought down in the Hudson River in 2009, is essentially a flying robot. It comes with a range of safety features that pilots hate because they take control out of their hands. The designers justify this by pointing out that the majority of air crashes occur not because the plane develops a fault but because the pilots make a mistake.

Yet, despite this, the safety record of the Airbus is no better than that of its main rival, Boeing. The reason for this, it appears, is that pilots learn to use the safety features to replace their own skills, not to supplement them. The classic example of this was the first Airbus crash in 1982, at an air show in France. The aircraft behaved exactly as designed, it was just that the pilot didn’t. The whole sorry,…

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