Wouldn't you know, math really works in real life. In my math class my professor brought up This really great article which basically explains mathematically why human nature leads to the economic crisis's we are experiencing right now. I will sum it up for you as simple as possible.
Lets assume you work at an investment bank. Lets say, for simplicity sake that you and 99 other colleagues have 10 million dollars each to invest in "a coin flip". Heads you double your money, tails you go broke. Now your coin is special. Your coin has a 3/4 chance of coming up heads. Do you bet on your coin or on theirs? If you bet on theirs it is 1/2 you will make money and get a big bonus, 1/2 you go broke. What if you bet on yours? If you win and everyone else wins you get your bonus (3/8 chance..3/4 yours*1/2 theirs). However if you lose and everyone else wins the company is bankrupt, and still no bonus for you.
Would you take the "Smarter risk" that gives you less chance of making money?
Really?
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