In light of the FTX thing, maybe a particularly important heuristic is to notice cases where the worst-case is not lower-bounded at zero. Examples:
Shorting stock vs buying put options
Running an ambitious startup that fails is usually just zero, but what if it’s committed funding & tied its reputation to lots of important things that will now struggle?
More twistily—what if you’re committing to a course of action s.t. you’ll likely feel immense pressure to take negative-EV actions later on, like committing fraud in order to save your company or pushing for more AI progress so you can stay in the lead?
Not that you should definitely not do things that potentially have large-negative downsides, but you can be a lot more willing to experiment when the downside is capped at zero.
In light of the FTX thing, maybe a particularly important heuristic is to notice cases where the worst-case is not lower-bounded at zero. Examples:
Shorting stock vs buying put options
Running an ambitious startup that fails is usually just zero, but what if it’s committed funding & tied its reputation to lots of important things that will now struggle?
More twistily—what if you’re committing to a course of action s.t. you’ll likely feel immense pressure to take negative-EV actions later on, like committing fraud in order to save your company or pushing for more AI progress so you can stay in the lead?
Not that you should definitely not do things that potentially have large-negative downsides, but you can be a lot more willing to experiment when the downside is capped at zero.