Risk - Reward, page-3

If some random guy came off the street and gave me the same proposition, flipping a coin, heads I win $20, tails I lose only $10 - I'd tell the guy to go get stuffed, 'cause chances are the coin is rigged, he's a shyster and I'm his mark.

Taleb (possibly also drawing on Kahneman and Tversky) pointed out that while sometimes it is the effect of myopic loss aversion, people's instincts are also often right... if a deal that sounds too good to be true, it often is.

Now, I also have to add that I recently inherited $1 million from a family member in Nigeria but have trouble raising finds to pay the taxes to release the funds... but if you wire me $10,000 to me to help pay the taxes I'll split it with you 50/50... - $10,000 to get half a million sounds like a no brainer right?


A minor but important detail is that the guy gets overexcited and makes an incorrect statement at about 4.25 into the clip when he says "You are guaranteed to win money". The odds quoted seconds later says that there is only a 1/2300 chance of losing any money at all - while the theoretical odds of losing money (assuming the coin and toss is fair) are slim, it is still possible, and not guaranteed.