Canonical · Decision-Making · Model
Asymmetric Payoffs
Nassim Taleb · 2012
"Seek bets where the downside is capped but the upside is functionally unlimited."
Most jobs are negatively asymmetric: upside capped at your salary, downside total if you're fired. Positive asymmetry flips that — a capped, known cost paired with an open-ended payoff. Writing a book costs a few months regardless of outcome; it can sell ten copies or ten million. The downside is fixed; the upside isn't.
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"A tiny, repeatable statistical edge becomes a near-certain profit only when combined with three other things — enormous volume, bets sized to the edge rather than to conviction, and a bankroll large enough to survive a bad stretch. Miss any one of the four and having an edge stops mattering."
John Kelly Jr.; Edward Thorp · FrameworkContinue→