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You'd think the optimal strategy is common sense but for small probabilities and large payoffs it really isn't. Many people simply ignore very risky investments
by modeless 5y ago
You'd think the optimal strategy is common sense but for small probabilities and large payoffs it really isn't. Many people simply ignore very risky investments on the theory that they're just too risky, when the actual optimal thing is to invest small amounts if the payoff is big enough.
- danielmarkbruce 5y agoDo people really ignore this? The entire VC industry seems dedicated to these exact bets. The guys at Sequoia for example are approximating the kelly criterion and likely don't ever think about it explicitly.