Smarter People Take More Risks | Scott H Young

The prospect theory shows that people are often willing to make riskier decisions to avoid losses than to make gains - even when the situation is identical but framed differently. For example, a 30% chance of death and a 70% chance of life are two different ways to describe the same thing.

If uncertainty is the default, an irrationally strong influence will be exerted on the outcome.

Once you understand a system, you can change some risk into uncertainty. Sometimes you can do this completely, but other times you can limit your range of uncertainties to a calculable level.

More knowledge allows you more controlled risk. However, sometimes, people overestimate their knowledge. They may think they understand a system when they really don't.

Uncertainty hides the risks of our decisions. This makes us tread very carefully. But, in reality, most of the decision terrain isn't nearly so dangerous. Things that look risky often aren't, and things that look routine and safe, often are.

The solution is to gain more knowledge and understanding of the specific area. This will clear the fog, often revealing a gentle passage.