Point, dispersion and distribution shape
There is point recognition, variance recognition, and distribution shape recognition.
When you have choices A and B and you're trying to figure out which is better.
https://gyazo.com/9324898fb86b09c25e28197c25d8a5ab
Comparing A and B in terms of expected value returns to point recognition.
Comparison by expectation is not the only truth.
When you try to compare the two with 95% certainty, you get a reversal of the relationship between the big and the small.
https://gyazo.com/0cb3d9d5c2ab4a253d81ee6533157d4b
For those who perceive it in terms of expected value, the option of reducing the variance without changing the expected value "doesn't make sense."
https://gyazo.com/9b0a40149fdcd460b6de970c38f5d5af
On top of this recognition of dispersion [Recognition of distribution shapes
A world with no recognition of distribution shape is a normal distribution where the distribution is symmetric
Expected and median values match.
50% chance of exceeding expectations
@tokoroten: By the way, I'm not saying that this company will succeed, I'm just saying that VC's invest in venture companies with the goal of getting 1 in 10 deals, so let's consider the upside. I thought a lot of people didn't seem to get this.
This is talking about "the rationale for investing in something that has only a 10% chance of exceeding expectations"
Or we could say, "There are cases where it is reasonable to pay for something you know will fail 90% of the time."
Mode 0 in some cases
There are cases where it is reasonable to invest in an investment even if the "most probable outcome is that it will be a scrap of paper.
https://gyazo.com/cf0f69711542660f6ae0c83616429921
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