AspiringRationalist comments on Useful Concepts Repository - Less Wrong

32 Post author: Qiaochu_Yuan 10 June 2013 06:12AM

You are viewing a comment permalink. View the original post to see all comments and the full post content.

Comments (105)

You are viewing a single comment's thread. Show more comments above.

Comment author: AspiringRationalist 11 June 2013 04:58:28AM 0 points [-]

The reason variance in financial investments matters, even if you only care about expected utility, is that utility isn't a linear function of money.

It's not just that. Even if your utility function with regards to money were linear, it would still be wise to try to decrease variance, because high variance makes returns not compound as well.

Comment author: Qiaochu_Yuan 11 June 2013 05:03:57AM 1 point [-]

If you value yourself getting money in the future, then that should be taken into account in your utility function.

Comment author: casebash 23 February 2014 08:39:20AM 0 points [-]

Not if you used the geometric mean