Econoethics.docx - Blanka Jaszczura 34185 The Logic of Risk Taking An article entitled “The logic of risk taking” is written by Nassim Nicholas

# Econoethics.docx - Blanka Jaszczura 34185 The Logic of Risk...

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Blanka Jaszczura, 34185 The Logic of Risk Taking An article entitled “The logic of risk taking” is written by Nassim Nicholas Taleb. Taleb is an American economist, philosopher and trader. He is of Lebanese origin. In his publications he focuses on the aspects of probability, uncertainty and fortuity. Currently he is a professor of New York University (Wikipedia, 2018). In the article Taleb focuses on ensemble probability, time probability, …. In the first paragraph author covers the problem of misunderstood probability by comparing and analysing ensemble probability and time probability. To make it more comprehensive, author investigates to potential situations. In first situation he discuss the issue of 100 people going to Casino. He describes that it is possible to calculate the „edge” and see whether the Casino is calculating the chances properly. However, the fact that some gamblers win, and some of them loose is typical for casino. Nevertheless, the situation when one of the gamblers loose, does not affect the other gamblers. Contrary to the situation when we take into consideration only one player –he goes to casino 100 times and he goes bust. Then he is not able to play any longer. This is an example of time probability which can be also called probability of ruin. By bringing those examples, the author shows that the probability than can be applied to the group of people cannot be applied to one single person. The same can be assessed when taking into consideration investors. The risk or probability that is exposed by investment advisors and financial professors to the group of investors cannot be applied to the individual investor. Those financial gurus are explaining the probability and risk based on long term approach of returns of the market. Moreover, the Taleb’s opinion is that any person is able to generate the returns that the advisors are telling, due to the fact that any person has unlimited and infinite amount of money.

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