3 ms·
This is not why the 90/50 contrast exists. It exist due to "absorption barriers", due to the ergodicity of the process - betting too big and hitting "uncle poi
by H8crilA 6y ago
This is not why the 90/50 contrast exists.
It exist due to "absorption barriers", due to the ergodicity of the process - betting too big and hitting "uncle points".
It's a bias present in most people, especially otherwise intelligent people: not understanding that there is a huge difference between expected value and ergodic properties. Between expected returns and risk. Just look up what VaR is, the concept is ridiculous, yet so widely used.
How much should the win (5/6) value be in a game of Russian roulette for you to play the game? The answer is that for most people it is not any number, that value doesn't exist.
- im3w1l 6y agoDon't underestimate how many people are on the brink of suicide anyway, and where a 1/6 chance of the good life seems like a good deal. Oh wait 5/6. Well that just makes it even better.
- alasdair_ 6y ago>not understanding that there is a huge difference between expected value and ergodic properties Can you expand on this? Are you claiming that the stock market is ergodic, or that it is not?
- H8crilA 6y agoThis applies much mote to actors within a securities market (both investors and issuers), not necessarily to this or that market itself. Most people's behavior is non ergodic. Though I suppose even if you broaden "the market" even to all of civilization - it is also non-ergodic, at least since nukes and hydrogen bombs were created.
- TrinaryWorksToo 6y agoRead Nassim Taleb's essays. https://medium.com/incerto/the-logic-of-risk-taking-107bf41029d3 https://medium.com/incerto/the-logic-of-risk-taking-107bf410...
- jaredtn 6y agoGreat point! The "uncle point" is a great phrase I hadn't known before.
- H8crilA 6y agoYou may be interested in Nassim Taleb's terribly written but actually very significant intellectual output.