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Which of these two options would you choose?
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Daniel Kahneman, the author of Thinking, Fast and Slow, did an experiment. He gave two options: Would you accept a gamble that offers a 10% chance to win $95 and a 90% chance to lose $5? Or. Would you pay $5 to participate in a lottery that offers a 10% chance to win $100 and a 90% chance to win nothing? Well… if you studied engineering, you have convinced yourself that the two problems are identical. In both, you are either richer by $95 or poorer by $5. But that’s engineering mindset… No question why we take so long to find someone that can endure us. The reality is that the second option attracts more people. A bad outcome is much more acceptable if it is framed as the cost of a lottery ticket that did not win than if it is simply described as losing a gamble. We should not be surprised: losses evoke stronger negative feelings than costs. If you have no idea what I’m talking about, you should take a look to the book below. It will teach you to avoid gambles and call some costs, investments.
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Vicente Valencia
I talk about Personal Growth, Management, Infrastructure and More | 👇JOIN +2k readers 👇
2012 Kenya. Elections coming. Security concerns rising. Investors… nervous. And still… The Lake Turkana Wind Power Project pushed toward financial close. 310 MW. One of the largest wind farms in Africa. Remote. Very remote. No proper roads. Weak grid. Logistics… borderline insane. Ideas such as domesticate zebras on the table… This wasn’t a project. This was a bet. And the closing? Just what I love… Pure tension. Lenders asking for more guarantees. Sponsors juggling political risk. Government...
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