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You weigh in potential gain and likely probability of gain and amount and likely probability of a potential loss. For example:
1) To bet 100$ with 51% chance of winning 200$ and 49% loosing is an acceptable risk
2) To bet 100$ with 1% chance of winning 12000$ is also an acceptable risk
3) To bet 100$ with 30% chance of winning 300$ is not an acceptable risk
I understand that you question probably does not relate to money, but I think it is easier to see the point that way. In real situations you would have to estimate probabilities and compare potemtial gains and losses.
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∙ 13y ago
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