ybf -
there's a concept in law:
>In contract law, a mistake is an erroneous belief, at contracting, that certain facts are true. It can be argued as a defence, and if raised successfully can lead to the agreement in question being found void ab initio or voidable, or alternatively an equitable remedy may be provided by the courts. Common law has identified three different types of mistake in contract: the 'unilateral mistake', the 'mutual mistake' and the 'common mistake'. It is important to note the distinction between the 'common mistake' and the 'mutual mistake'.<
We have indeed been talking about different things. I believe you are correct in your argument and I plead guilty to reading over your point. What I meant originally, and what Tversky discussed, was the mathematical equivalence of a 100% chance of making $.03, and 3% chance of making $1.00. Thus the relevance of my comments about a tangential colloquy.
While the example is renovated the original point about cognitive bias obscuring rational assessments of quantitative differentials and equivalents, and their potential role in investment theses, remains.
Quad