Convexity
2020-09-02
- Optionality leads to asymmetric payoff
- Multiple iterations of games with asymmetric payoff
- Convexity bias: Results of trial and error in which gains and harms are asymmetric (convex payoff function)
- The more convex the payoff function, the larger the bias
- The more volatile the environment, the larger the bias
- Antifragile: broad class of phenomena endowed with convexity bias
- Convexity is easier to attain than knowledge
- A "1/N" strategy is almost always best with convex strategies
- Serial optionality
- stay flexible with frequent ways out
- be very short term
- Nonnarrative research
- black swan harvesting
- agents who know how to use th eoption by opportunistically switching and ratcheting up
- Theory is born from practice more often than the reverse
- Premium for simplicity
- Better cataloguing of negative results
References