[eDebate] ans Ross
Mon Jul 3 11:39:45 CDT 2006
yeah, taken literally, treating a 1% likelihood as a certainty (100%) is just stupid.
if a poker player did that they would be gone fast and if that is how Cheney behaved in the market, he would be broke fast.
which was your point.but as a rhetorical device to get folks to treat 1% chances of disaster seriously, it is about time. especially at the national and global policy level, a 1% risk of annihilation/catastrophe certainly needs to command attention. i would trade 50 instances of 100% paper cuts to avoid a single 1% instance of losing a lung.
the default has to be value = risk x impact.
the argument that there is a lower threshhold at which one ought to just ignore that calculation is attractive because we can't devote infinite resources to risk-assessment. as risk drops, the number of possible scenarios grows rapidly: there are so many possible great and horrible things that could happen with a chance of .01% that trying to evaluate them all would suck up all your time and attention and computational power.
in the end, it may be that the rich have the resources to evaluate much lower risks than the poor just like a novice chess player evaluates 3 possible alternatives before deciding while an expert chess player evaluates 300 of them. and no doubt there is huge money to be made by considering low risk/high impact events that are below the risk-evaluation threshhold of market competitors.
but... yah... shooting the guy in the bar because he looks at you funny is probably unwise... unless his left eye twitches... THAT IS TROUBLE!
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