Risk and Opportunity:
When thinking about risk in retrospect, we are wired to mostly only think about the missed upside of opportunity. Whereas, we forget that there was just as much of an equal (or bigger) amount of the tendency to fail, as well as succeed. Maybe this is why regret is stronger in retrospect than gratitude.
How many times does one think about the past in terms of missed opportunities, and smile with gratitude for it?
Regret and Gratitude:
A trader thinks about a risky play they hesitated on and missed, that eventually delivered outsized returns. They remember the trade and are filled with regret for the missed opportunity. They forget that there were just about equal chances of the risky trade going south and causing a disaster.
So, we ask: is regret a function of greed, or is gratitude the mark of contentment?
By doing nothing and simply sitting on cash, the trader didn’t lose. But they also didn’t make a profit. On the one hand they can choose to be grateful that they didn’t lose. Instead, they choose to regret that they failed to commit. To take action. Because the bias of hindsight is fixated on missed upsides, not gratitude for salvation.
This tells us something —we chose whatever token the arrogance of our presumption offers. We choose regret because we think —given what we now know in the present— that, in retrospect, we could have easily made the correct call. But we didn’t. Because we could’t. Perhaps if we made peace with the universal message of probability, and that, given multiple possible outcomes, only one desired outcome is possible, we would simply optimize for respawning multiple opportunities instead of expecting to hit jackpot with few opportunities.
A Game of Numbers:
I imagine if we faced opportunities and outcomes as a numbers game, we can spread the acuteness of risks across a wide surface area for better absorption. Optimize to maximize opportunities across wider spectrums vs fixating on highest possible outcomes which would introduce drag and tend to regret.
If we understood probability better, would we lead better lives? I doubt that, anyways.
