I recently finished re-visiting my notes and highlights from the book Thinking, Fast and Slow.
The book looks like it's out of a war with visible wrinkles, child scribbles, and most importantly six dozen markers bursting out. Arguably, this was the hardest book I've ever read. I learned a lot and left the book with the impression that I have to read it a couple more times to consolidate all that knowledge.
After migrating all the physical highlights and notes to my Notion database I realized one thing: one of the highlights was so important and life changing that if that single lesson was the only lesson I learned from this book, it was enough to call this book valuable.
The quote I highlighted is a very long paragraph but the beginning of it was enough to wake me up:
"I sympathize with your aversion to losing any gamble, but it is costing you a lot of money. Please consider this question: Are you on your deathbed? Is this the last offer or small favorable gamble that you will ever consider?"¹
People are risk-averse and even when the expected value of a gamble² is positive, the fear of losing money prevents them from taking favorable risks.
When I'm asked to toss a coin where I'll lose $100 or win $120, I prefer not taking the risk since losing $100 seems bigger than winning $120.
When I'm offered to toss 100 coins, things change. I almost know that I'll be profiting a lot out of this gamble.
Hence the author says, when you were tossing one coin, why are you thinking that gamble in isolation? Our lives are full of opportunities and if you think all future gambles collectively and have enough emotional discipline to take favorable risks, this would be no different than tossing 100 coins.
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¹ Daniel Kahneman, "Thinking, Fast and Slow", Penguin Books (2012), Risk Policies, 338
² The word gamble should not taken literally in this context. It means all investment opportunities and risky decisions in life.