"I began to think about what was the secondary thing that I should give up so that I could focus on what was most important. And at the end of the day, there was only one thing that was most important to me: being with you.

” - Andre Goz (Part 1) The 8 answers to an interesting question are as above, a “simple” multiple choice question.

You press the red button?

Or green?

This question is more interesting than expected. Let me try to answer it: 1. According to the expected value theory, the green button is worth 50 million; 2. Many people are still willing to choose the confirmed 1 million because they can't stand the 50% chance.

Neither can be obtained; 3. In other words, if a person cannot bear "having nothing", then the choice on the right is equivalent to "you have a 50% probability of getting 100 million and a 50% probability of dying."

Of course you cannot bear to die, let alone the 50% chance; 4. Think openly, if you have the right to make this choice, you can sell the right option worth 50 million to someone who can afford it, for example, 2,000

Sell ??it to him for 1 million (or even higher); 5. Continue to optimize the previous item, taking into account the increased possibility of "finding someone willing to buy your option rights", you can sell this right with only 1 million (low down payment),

But it requires the buyer to share it with you when he wins 100 million; 6. Going one step further, you can make this option a lottery and issue it to the public, cut the option into pieces for retail, and print 200 million copies for two yuan each.

The jackpot is 100 million.

Compared with 5, the risk is lower and the return is greater; 7. In view of the successful business model of 6, start raising the next 100 million as the jackpot, making it a business.

8. Based on P/E valuation, raise 2 billion and go public with a market value of 10 billion.

Three risky decision-making concepts from 1 million to 10 billion. Let us jump out of the brain teaser game and study the serious mathematical principles behind it.

There are three concepts of risk decision-making in economics: expected value, expected utility, and prospect theory.

Expected value: In probability theory and statistics, the expected value of a discrete random variable (or mathematical expectation, or mean, also referred to as expectation, called expected value in physics) is the probability of each possible outcome in the experiment multiplied by its result

Sum.

In other words, the expected value is the average of the equivalent "expectations" calculated from the results of a random experiment repeated many times with the same chance.

(From Wikipedia) Expected utility: In microeconomics, game theory, and decision theory, expected utility is a utility theory that refers to the choice made by an individual in a risky situation to maximize the expected value of a certain amount.

This hypothesis is used to explain expected value in gambling and insurance.

(This concept was born to solve the "St. Petersburg Paradox") Prospect Theory: In the 1970s, Kahneman and Tversky systematically studied prospect theory.

For a long time, mainstream economics has assumed that everyone is "rational" when making decisions, but this is not the case in reality. Prospect theory has successfully explained people's asymmetric psychological effects on profit and loss, probability of occurrence, etc.

There are many seemingly irrational phenomena.

Based on the above theoretical basis, I would like to throw out a few consciously interesting conclusions: 1. The anti-human nature of "making decisions according to the overall optimal probability at every step" is the number one secret of successful people in the traditional sense; 2. The poor will themselves

"Probability rights" were sold to the rich at a low price. Probability rights are a more hidden and larger exploitation of surplus value (which does not mean that I agree with the concept of surplus value); 3. The currently popular artificial intelligence relies on the

Independently and cold-bloodedly calculate the optimal probability to defeat humans.

For example, Alpha Dog; 4. However, irrationality and impulsiveness may become the last stronghold of mankind.

(I will write this separately in the future) Let’s go over the basic concepts first.

Expected value theory (the basic decision-making tool of wise men) According to the expected value theory, a 100% chance of getting 50 million and a 50% chance of getting 100 million are the same thing.

Bayes' theorem is one of the simple formulas used most frequently by smart decision makers.

Description: "Multiply the probability of a loss by the amount of a possible loss, multiply the probability of a profit by the amount of a possible profit, and finally subtract the former from the latter. That's what we've been trying to do. The algorithm isn't perfect, but

It's that simple." (By Buffett) Example a: (from the biography of former Goldman Sachs CEO Rubin) "After the two companies announced the merger, Univis' stock was trading at $30.5 (before the merger was announced).

). This means that if the merger goes through, the stock price increase from the arbitrage trade may be $3, because each share of Univis will be worth $33.50 (0.6075 × the price of each share of Brady).

If the merger fails, Univis' stock may fall back to about $24.50 per share, and the stock we purchased may drop by about $6.