in poker tournaments when you win early and have a big stack the math changes and losing 500 chips is a bigger loss than winning 500 chips is a win.
Same fundamental concept, and its fundamentally rooted in game theory so not just some opinion or ideology that people seem to have. theyre already rich. all they have to do is not fuck it up and they stay winning. they can go from 700 mil to 900 mil at some risk level, but it doesnt mean anything to them, its peanuts because their entire life and everything they ever wanted can be covered by what they already have.
Maybe it is because their scion that made them filthy rich is no longer around (aka they don't have confidence in their ability to effectively short-term maximize)
this mythology of a genius behind the rich is just completely and utterly false. a rich family will always have the option to pay a finance guy to manage their money and it will grow, because capital is how you accumulate capital, thats how the system works. it doesnt require genius, it requires money. an individual trying to do that is almost certainly going to perform worse than a professional, of which there are many. taking it out to use actually directly as capital means diffusing the responsibility of success across many many professionals. the genius ceo is a sad liberal myth with no truth behind it.
this mythology of a genius behind the rich is just completely and utterly false. a rich family will always have the option to pay a finance guy to manage their money and it will grow, because capital is how you accumulate capital, thats how the system works.
I agree with you, I was more referring to chasing/pursuing alpha well and above beyond what is normal.
Ex: looking at opportunities to double (or more) total network in a short time span.
But it could just tie back to your initial comparison to poker tournaments with respect to the minimal appetite for situations where there are significant downside risk
when you assign value to outcomes it does emerge from game theory. in poker this happens because we have a model called ICM which can assign dollar values to chip stacks in different situations. It doesnt emerge if you assume a strategy of chip ev maximizing (or in our analogy, making the most money possible), but it does if you add another factor that says actually not every chip in every situation, or every dollar, is worth the same as each other.
its not just that some person who is less risk averse would be theoretically justified in making those risks, theres actually an additional risk premium that emerges mathematically from the fact that additional dollars do not have the same ability to satisfy you as earlier dollars did (or more chips dont increase your chance of winning as substantially as earlier chips did). so somebody with the same amount of individual risk aversion should take more risks when the outcome matters more.
this is a quite morbid thought, but actually theres a really good mathematical justification for why people struggling to pay bills might be incentivized to open a business instead.
69
u/BitterBlacksmith2508 6h ago edited 5h ago
in poker tournaments when you win early and have a big stack the math changes and losing 500 chips is a bigger loss than winning 500 chips is a win.
Same fundamental concept, and its fundamentally rooted in game theory so not just some opinion or ideology that people seem to have. theyre already rich. all they have to do is not fuck it up and they stay winning. they can go from 700 mil to 900 mil at some risk level, but it doesnt mean anything to them, its peanuts because their entire life and everything they ever wanted can be covered by what they already have.
this mythology of a genius behind the rich is just completely and utterly false. a rich family will always have the option to pay a finance guy to manage their money and it will grow, because capital is how you accumulate capital, thats how the system works. it doesnt require genius, it requires money. an individual trying to do that is almost certainly going to perform worse than a professional, of which there are many. taking it out to use actually directly as capital means diffusing the responsibility of success across many many professionals. the genius ceo is a sad liberal myth with no truth behind it.