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Also, note that the value of money is not linear: I'll take $500k over a 50% chance of $1M. In fact, I'll happily take $400k over a 50% chance of $1M. (Interes
by JoachimSchipper 15y ago
Also, note that the value of money is not linear: I'll take $500k over a 50% chance of $1M. In fact, I'll happily take $400k over a 50% chance of $1M.
(Interestingly, I seem to recall some research that showed that, essentially, owners of big companies tend to refuse $600k over a 50% chance of $1M.)
- JoeAltmaier 15y agoTRue. Add to that, reality is a distribution of outcomes, not just a single percent chance. Nobody's mentioning the 'tail of the curve' where you make $1B in 7 years. And everything in between. Integrate P(evt)*Yield(evt) over all outcomes for a real valuation.