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FormallyknownasRoko comments on $100 for the best article on efficient charity -- deadline Wednesday 1st December - Less Wrong
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Sure, I get that. The thing I was responding to was jsalvatier's comment that "It's important to understand why you normally diversify. The reason why diversification is a good idea is because you have diminishing marginal utility of wealth." S/he wasn't talking about charity there, I don't think... though maybe I was confused about that.
"Diminishing marginal utility of wealth" means the same thing as "don't want to be exposed to a single point of failure".
Yes, I think we do need a series on econ/finance.
(blink)
Two investment strategies, S1 & S2. They have the same average expected ROI, but S1 involves investing all my money in a single highly speculative company with a wider expected variance... my investment might go up or down by an order of magnitude. So, S1 suffers from a single point of failure relative to S2.
You're saying that I could just as readily express this by saying "S1 involves diminishing marginal utility of wealth relative to S2"... yes?
Huh. I conclude that I haven't been understanding this conversation from the git-go. In my defense, I did describe myself as finance-phobic to begin with.
No - what's under question is the scaling behavior of your own utility function wrt money; if you exhibit diminishing marginal utility of wealth, that means you want to avoid S1.