Sucker Games

https://toluakinola.substack.com/p/sucker-games

by takinola • 2 years ago

4 5 2 years ago

toluakinola.substack.com

"A classic example is your boss offering you a high-risk critical project without adequate resources or support and nothing more than an attaboy and a hearty slap on the back. This is called being set up to fail. If you are dumb, you charge forward with nothing but grit and optimism and join the pile of corpses of those that have died trying. If you are smart, you help your boss understand the risks and figure out a plan to mitigate them. If your boss is unwilling to face up to the challenges, then you figure out your plan to get out of that situation as quickly as possible. Thinking ahead is always a good way to anticipate and side step sucker games."

This characterization assumes that you are risk-averse or risk-neutral. There exist quite some people who are risk seekers.

yjftsjthsd-h2• 2 years ago

Risk seekers are willing to take a wider std deviation of outcomes, but if they take negative expected value options then yeah I'd call them suckers.

aleph_minus_one3• 2 years ago

but if they take negative expected value options then yeah I'd call them suckers.

A "negative expected value option" is founding basically any startup. :-)

How can this contradiction be resolved?

Simple: startup founders don't look for the (negative) expected value, but for the, say, 5 % quantile gain (i.e. the gain that they will only exceed with a probability of 5 %). This gain is sufficiently large.

Sucker Games

Related Stories