The Road to Perdition Two factors that are normally considered in evaluating the outcome of a contemplated action are encapsulated in the notion of an expected value . An expected value is calculated from two independent components: the probability of an outcome and the 'payoff' of that outcome, where a 'payoff' can be negative: that is, a loss. But into the mathematics comes the human factor, expressed in our risk/return profile. People can choose between two mathematically equal expected values depending on their degree of risk aversion. For example, in making a wager, one might be willing to accept a large risk of losing a small amount and but be unwilling to take a small risk of losing a very large amount, even though they may have the same expected value. That's why few people are willing to play Russian roulette even for large sums of money. In relation to the Newsweek Koran story fiasco, the existence of a wartime situation distorts the editorial process to ...
Comments
Post a Comment