Duke: Investors prioritize risk calculation over expected value
Annie Duke · 20VC: Annie Duke on Reversible vs Irreversible Decisions, How To Evaluate Risk, The Theory of Sunk Cost in Venture & How to Optimise Both the Discussion and Quality of Investment Decisions · Jan 11, 2021 · at 34:01
Annie Duke, author and decision strategist, addresses risk management and investment decision-making during a rapid-fire segment on 20VC.
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“I think the biggest misconception about risk is that, this is going to be kind of weird, is people spend a lot of time trying to calculate their risk, but they don't think enough about whether they actually... Have the expected value, right? Like, are they winning or losing? So I think that we can get caught up in discussions about, like, what should our bet sizing be, and, you know, how broad should our portfolio be, and whatnot, and we don't circle back to say, are we actually winning in the first place enough? So I would say that, that investors think that risk is kind of, in a lot of ways, the most important question, when there's a, just a much more basic question that's more important.”
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