Because doing so will lead to worse outcomes on average. Over a long series of events, someone who just follows the math will do better than someone who is risk-averse wrt to 'utility'. Of course, often our utility functions are risk-averse wrt to real-world things, because of non-linear valuation - e.g, your first $100,000 is more valuable than your second, and your first million is not 10x as valuable as your first $100,000.
Thanks. Just going to clarify my thoughts below.
Because doing so will lead to worse outcomes on average.
In specific instances, avoiding the negative outcome might be beneficial, but only for that instance. If you're constantly settling for less-than-optimal outcomes because they're less risky, it'll average out to less-than-optimal utility.
The terminology "non-linear valuation" seemed to me to imply some exponential valuation, or logarithmic or something; I think "subjective valuation" or "subjective utility" might be better here.
This is a thread where people can ask questions that they would ordinarily feel embarrassed for not knowing the answer to. The previous thread is at close to 500 comments.