If you have nothing to lose, consider desperate high risk options. If you are in a comfortable position consolidate and avoid risk.
I have, in fact, seen this given as investment advice. If you are going to go broke in a big way, take risks; this is the time to play the lottery, you probably won’t win, but you might and by this point you have nothing to lose. If you have plenty of wealth, and aren’t playing for the thrills, this is when you play safe, no more need to take significant risks at this point.
Sure, this behavior seems “insane” if you assume the maximand of states is something like “the general welfare”, but that is simply a bad assumption.
One can label a collective process “insane” without so labeling any or all of the self interested actors participating therein. While many of the individuals involved may be acting more or less rationally the outcome is a clear instance of “People Are Crazy, The World Is Mad”.
If you are going to go broke in a big way, take risks; this is the time to play the lottery, you probably won’t win, but you might and by this point you have nothing to lose.
That strategy successfully killed a number of large banks, Barings being a classic example.
It may very well have been game-theoretic rational for the individual rogue trader to just keep gambling once things got sufficiently bad, although his co-workers would certainly have wanted him to stop long before then.
Hm. I would disagree—you only ask “how do I lose” when you’re close to winning and winning is a “stable” state (like going on a fun vacation), and you only ask “how do I win” when you’re close to losing and losing is a known stable state (like having to call a tow truck to pull you out of a muddy canyon). When you’re in situations without a convenient “floor” (or ceiling) to stand on, then you stick with the middle question, which is “what will put me ahead?”
I have, in fact, seen this given as investment advice. If you are going to go broke in a big way, take risks; this is the time to play the lottery, you probably won’t win, but you might and by this point you have nothing to lose. If you have plenty of wealth, and aren’t playing for the thrills, this is when you play safe, no more need to take significant risks at this point.
Absolutely. This also applies if you have an insane government that will bail you out if your risky investment doesn’t pay off.
Is this hackable on a personal level?
Sure, this behavior seems “insane” if you assume the maximand of states is something like “the general welfare”, but that is simply a bad assumption.
One can label a collective process “insane” without so labeling any or all of the self interested actors participating therein. While many of the individuals involved may be acting more or less rationally the outcome is a clear instance of “People Are Crazy, The World Is Mad”.
That strategy successfully killed a number of large banks, Barings being a classic example.
It may very well have been game-theoretic rational for the individual rogue trader to just keep gambling once things got sufficiently bad, although his co-workers would certainly have wanted him to stop long before then.
Hm. I would disagree—you only ask “how do I lose” when you’re close to winning and winning is a “stable” state (like going on a fun vacation), and you only ask “how do I win” when you’re close to losing and losing is a known stable state (like having to call a tow truck to pull you out of a muddy canyon). When you’re in situations without a convenient “floor” (or ceiling) to stand on, then you stick with the middle question, which is “what will put me ahead?”
I’ve edited something like this into the post.