Newman’s Paradox

Newman's Paradox highlights that in certain decision-making scenarios, individuals tend to prefer the option with the highest overall success rate, even if, in individual cases, another option might be preferable. For example, choosing a lottery that rarely wins but has very high payouts, versus one that frequently wins small amounts, can be counterintuitive. Despite the larger total winnings from the less frequent but bigger prizes, people often favor the safer, more consistent smaller wins. The paradox reveals how perceptions of risk and reward can conflict with logical conclusions about probability and expected outcomes, leading to choices that seem irrational but are rooted in human psychology.