It’s arbitrary, but that’s OK in this context. If I can establish that this works when the ratio is 1 in a billion, or lower, then that’s something, even if it doesn’t work when the ratio is 1 in 10.
Especially since the whole point is to figure out what happens when all these numbers go to extremes—when the scenarios are extremely improbable, when the payoffs are extremely huge, etc. The cases where the probabilities are 1 in 10 (or arguably even 1 in a billion) are irrelevant.
It’s arbitrary, but that’s OK in this context. If I can establish that this works when the ratio is 1 in a billion, or lower, then that’s something, even if it doesn’t work when the ratio is 1 in 10.
Especially since the whole point is to figure out what happens when all these numbers go to extremes—when the scenarios are extremely improbable, when the payoffs are extremely huge, etc. The cases where the probabilities are 1 in 10 (or arguably even 1 in a billion) are irrelevant.