"Imagine someone offers you a chance to win a thousand dollars. All you need to do is roll a six on a standard die. The catch? You must pay $500 upfront, and if any other number comes up, you get nothing. With five chances out of six of losing your money and only one chance of netting $500, this is clearly a terrible bet."
"They simply follow their gut instincts. Five hundred managers see their businesses fail spectacularly. Companies go bankrupt, employees lose jobs, and these managers are rightfully demoted. But 100 managers succeed. Did they make good decisions? The media inevitably finds the luckiest of these winners, the one with the most dramatic success story. They interview him about his childhood, his intuition, how his best ideas come when he's not thinking at all. He becomes a management guru."
A negative-expectation gamble demonstrates that occasional wins do not justify poor choices when most participants lose. Single lucky outcomes can create misleading perceptions of skill. In business, many unresearched, gut-driven investments fail while a minority succeed by chance. Media focus on dramatic winners amplifies survivorship bias and elevates individuals who benefited from luck rather than rigorous process. Good decisions can fail and bad decisions can succeed due to randomness. Sound judgment depends on analysis, planning, and evaluating probabilities rather than relying on isolated successes or intuition.
Read at Psychology Today
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