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Comment by llimllib | Hacker News Reader

> working for an established company will give you a far better expected financial outcome at lower risk.

Tiny, tiny nit: that final phrase is redundant. Calculating an expected financial outcome includes the risk.

Agree with everything you're saying.

It's not redundant. It's true that you use risk in calculating an expected financial outcome, but that doesn't mean that a better expected financial outcome has lower risk. You can have a better expected financial outcome at higher risk, in which case it may be a worse option if you have lower risk tolerance, despite the better expected financial outcome!

The risk also needs to be considered separately, though. For example, which of these is better compensation?

$100,000/year

Each year, there is a 0.1% chance that you will be paid $1 billion.

Simple math tells us that the second one has a 10x higher expected financial outcome. But few people would actually consider that to be better compensation. Lower risk is better, to an extent that can outweigh a higher expected financial outcome.

If you get both a better expected outcome and lower risk, that's two benefits, not just one.

I'm sorry, but there is a 0% chance that an employee will be paid $1 billion. An employee is just a hired hand and has zero control and zero information about how money is being distributed. Once that kind of money is on the table, there would certainly be some way for people controlling the company to change that outcome, so an employee will never see that kind of money. And it will be done. Just business. Nothing personal.

That sort of thing is called a "hypothetical". It's not intended to be a realistic scenario.

Well that's the whole point - the realistic numbers are more like a choice where you (A) receive $100k now; or (B) receive a 1% chance of 5 million; where the (B) option is worse in all aspects, both higher risk and lower expected value.

However the expected value may be that much, you are not "rolled" for that outcome. You have one life not a distribution of lives.

I'm not sure if it's safety, or a knowledge that risk assessment also has to take into account the risk that your assessment is wrong. How can anyone make a prediction of any 0.1% chance? The accuracy of the information going into combines in all sorts of horrible ways, and not likely to your advantage. There's no hypothetical in which that chance would make sense, in which it would be calculable and accurate, so instead we intuitively mark it as simply foolishly optimistic belief.

Plus, if you really did have solid odds, you could sell those odds, i.e., have someone invest in you.

I think once you take into account our relatively short biological lifespans (and the subsets of them in which we are healthy and fit to do whatever we like even shorter), the second option just doesn't make any sense for most people. There is value in having $100k now.

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