> It also ignores another big factor if psychology, humans are a lot more afraid of losing what they have than gaining anything.
Rightly, I think. The marginal utility of the next dollar is higher when you have fewer dollars. (I think of it as roughly a 1/x curve, but I have no solid data for this.) This means that, if I bet 50% of my available money on a 50/50 chance, I will lose more utility with a loss than I will gain with a win.
But the more I have, the flatter the curve out where I am. So the richer I am, the more I can make that 50/50 bet, not just because I can take the loss better, but also because in terms of my personal utility, the rewards and losses are more evenly balanced.
Also note that if you have a 20% loss, it takes a 25% gain (on what you have left) to bring you back to even.
So even in this stupid simulation, it just doesn’t work, as people get wealthier they actually risk less.
This whole article is Marxist academic bullshit, eaten up by Marxist upper class tech 20 year olds in this thread.