When given a choice between getting $1,000 with certainty, or having a 50% chance of getting $2,500, most people will choose the certain $1,000 — even though the expected value (the average value over repeated trials) of the uncertain option is $1,250. Most people would reject a gamble where they would gain $100 if a fair coin lands on heads, and lose $100 when the coin lands on tails, because losses have a much higher impact than gains.
Why Companies Are Betting Against Big Ideas
When given a choice between getting $1,000 with certainty, or having a 50% chance of getting $2,500, most people will choose the certain $1,000 — even though the expected value (the average value over repeated trials) of the uncertain option is $1,250. Most people would reject a gamble where they would gain $100 if a […]
February 29, 2012
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Accelerate your career with Harvard ManageMentor®. HBR Learning’s online leadership training helps you hone your skills with courses like Innovation and Creativity. Earn badges to share on LinkedIn and your resume. Access more than 40 courses trusted by Fortune 500 companies.
Unlock your team's curiosity and willingness to take smart risks.