SBF’s lack of risk aversion led to FTXDM implosion


Victor Haghani, one of the founding partners of LTCM, applied the economic theory of choice under uncertainty to try and explain how FTXDM crumbled to the ground. 

In layman’s terms, “choice under uncertainty” means that you have to make a decision, but you’re not sure what will happen as a result of your choice. The theory posits that, in that instance, you will choose the option that maximizes the expected utility rather than the expected wealth.

Going against the sane

Here is a good example of choice under uncertainty:

Let’s say you discover an investment with a 98% chance of going to zero and a 2% chance of 10,000x ROI. Most wealthy people would choose to invest between 0.1% – 1% of their wealth in this investment because it is a reasonable thing to do. Not SBF, though.

“Yeah. I think the way I saw it was like, let’s maximize EV: whatever is the highest net expected value thing is what we should do. As opposed to some super sublinear utility function, which is like, make sure that you continue on a moderately good path above all else, and then anything beyond that is gravy.”

Victor Haghani, LTCM founder. 

Haghani relates this theory to SBF’s appetite for risk. He says Bankman-Fried made his investment decisions “as though he had no risk aversion.” In the example above, SBF would choose to invest 100% of his wealth in that investment because it maximizes the expected wealth.

Your money is safe with us!

The Bahamas Securities Commission has confirmed that financial information about the fallen FTX exchange can now be legally shared with debtors in the US. The Commission also revealed that it holds $3.5 billion worth of confiscated FTX Ventures assets. 

The assets were transferred onto digital assets held by the commission on Nov.12, 2022, for ‘safekeeping’ investors don’t know how to feel about this new information. 

According to the press statement given by the commission, FTX Digital Market (FTXDM) was under a string of cyber attacks that locked employees out of the FTXDM Amazon Web Server. 

At the risk of losing all the remaining digital assets, the commission obtained a court order to safeguard the remaining digital assets by transferring them to crypto wallets that the commission controls.


Follow Us on Google News


Source link

Back to top button

Sweet Bonanza

Baccarat Online

Lucky Neko

Slot88

Slot777

Slot Bet 100

Slot777

Slot777

slot bonus

slot gacor gampang menang

sbobet88

sbobet88

daftar slot777

sbobet88

slot starlight princess

sbobet88

slot777 gacor

slot gacor

slot joker123

pragmatic play

bonus new member

slot gacor

pragmatic play

slot deposit qris

Slot777

Slot777

Slot777

Slot88

slot gacor

ARES GACOR

Slot Gacor

GADUNSLOT

sbobet

slot bonus

pragmatic

slot777

pragmatic

pragmatic

pragmatic

sbobet

sbobet

gates of gatotkaca

joker123

slot bonus

slot bet kecil

pragmatic play

slot bet kecil

joker123

Joker123

https://sbobet-gadunslot.matthewwilliamson.com/products/sbobet

https://sbobet-gadunslot.thebotanist.com/products/sbobet-daftar

https://tutordong-garansikekalahan.wonhundred.com/products/slot-garansi-kekalahan-100

https://gadunslot-pastirankslot88.zacbrownband.com/products/slot88-agen-situs-judi-slot-online-terpercaya-no-1

https://sl0t-thailand-gadunslot-gacor.eightoclock.com/products/slot-server-thailand/

https://slottt-thailand.gds.eightoclock.com/products/slot-thailand

https://slotresmi-gadunslot.matthewwilliamson.com/products/slot-resmi

Adblock Detected

Please consider supporting us by disabling your ad blocker