vault backup: 2025-10-29 17:14:01

the-failure-of-risk-management.md

@@ -87,6 +87,20 @@ Assuming that the value of one dollar were linear,
 all three games should have the same solution,
 but in reality one's answers will differ.
 
+#### Formulas
+
+$$
+\text{Utility} = 1 - e^{\frac{-X}{S}}
+$$
+
+where $X$ is Payoff, and $S$ is a scale unique to a decision maker.
+
+$$
+\text{CME} = -S \times \ln(1 - \text{Utility} \times \text{Pr})
+$$
+
+where $Pr$ is the probability of Payoff.
+
 ### Expert Opinion Must Be ~~Adjusted~~
 
 Expert opinion is valuable despite its flaws.