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> * The value it’s estimated to generate > * The amount we’re willing to bet A reasonable bet should correspond to the (estimated) probability of its outcome.
by Archelaos 2y ago
> * The value it’s estimated to generate
> * The amount we’re willing to bet
A reasonable bet should correspond to the (estimated) probability of its outcome. So the amount someone is willing to bet should directly reflect the value it is estimated to generate. Betting higher or lower makes no sense.
- datadrivenangel 2y agoIt depends on your risk tolerance! We may want to bet more for more likely outcomes, even if the expected return is lower, if we value predictability and the cost of a bad portfolio outcome is high.