The Art of Risking Everything
1594204128
Nate Silver
Notes
“They’re not taking enough risk.” It’s true when people are contemplating personal changes. Annie Duke’s book Quit is full of evidence about this. An experiment conducted by the economist Steven Levitt found that when people volunteered to put major life decisions such as whether to stay at a job or in a relationship up to the outcome of a coin flip, they were happier on average when they made a change.
In general, when two players engage in a big confrontation in tournaments, it’s (-)EV for them and +EV for the rest of the table. You don’t want your opponents to come after you out of spite.
The Logic of Sports Betting, with coauthor Matthew Davidow, is perhaps the best gambling book I’ve ever read.
According to Schull, many of the problem gamblers she met didn’t actually want to win…compulsive slot machine gamblers, Schull said, are seeking escape from the pressures of everyday life. Casinos are happy to facilitate this by placing players in what she calls the “machine zone” – a flow state where they can shut out the distractions of the real world.
Successful risk takers:
- Are cool under pressure – they don’t try to be heroes, but they can execute when chips are down.
- Have courage – they’re insanely competitive and their attitude is: bring it on. “You have to have a lot of self-confidence to be a top one hundred poker player. It’s just mandatory; you really have to have it baked into you” – Scott Seiver
- Have strategic empathy – they put themselves in their opponent’s shows.
- Are Process-oriented, not results oriented – they play the long game
- Take shots – they are explicitly aware of the risks they’re taking – and they’re comfortable with failure.
- Take a raise-or-fold attitude towards life – they abhor mediocrity and they know when to quit. They don’t “call.” “You have to recognize that you have agency and authorship and sometimes bold action is the best course of action, even if the conditions and the outcome [are] uncertain. The riskiest course of action is oftentimes just remaining passive.” said McMaster
- Are prepared – They make good intuitive decisions because they’re well trained – not because they “wing it.”
- Have selectively high attention to detail – they understand that attention is a scarce resource and think carefully about how to allocate it. …one thing you don’t want is to be consumed by the stakes of the mission; that’s a waste of bandwidth.
- Are adaptable – they are good generalists, taking advantage of new opportunities and responding to new threats.
- Are good estimators – they are Bayesians, comfortable quantifying their intuitions and working with incomplete information.
- Try to stand out, not fit in – they have independence of mind and purpose.
- Are conscientiously contrarian – they have theories about why and when the conventional wisdom is wrong. Conscientious contrarians look for flaws in people’s incentives rather than their intelligence.
- Are not driven by money – they live on the edge because that’s their way of life.
So here’s my theory to the secret of Silicon Valley’s success. It marries risk-tolerant VCs like Moritz with risk-ignorant founders like Musk: a perfect pairing of foxes and hedgehogs.
Politics is in some sense about encouraging people to be more partial. Challenging people’s assumptions on taboo subjects usually isn’t a good way to make friends and influence people.
Kelly Criterion is edge/odds. That is the amount you should bet is the size of your edge, divided by how long the odds are.
“Technology happens because it is possible…It is a profound and necessary truth that the deep things in science are not found because they are useful; they are found because it was possible to find them.”
Robert Oppenheimer
“People don’t take guillotines seriously. But historically, when a tiny group gains a huge amount of power and makes life-altering decisions for a vast amount of people, the minority gets actually, for real, killed”
Jack Clark
Resources
- River vs Village
- Expected Value
- Quit – Annie Duke
- What’s Our Problem – Tim Urban
- Kelly Criterion
- Fortune’s Formula – William Poundstone
- The Logic of Sports Betting – Matthew Davidow