Feels like the most straightforwardly rational argument for portfolio diversification is the assumption your EV and probability estimates almost certainly aren’t the accurate or at least unbiased estimator they need to be for the optimal strategy to be to stick everything on the highest EV outcome. Even more so when the probability that a given EV estimate is accurate is unlikely to be uncorrelated with whether it scores particularly highly (the good old optimiser’s curse, with a dose of wishful thinking thrown in). Financiers don’t trust themselves to be perfectly impartial about stuff like commodity prices in central Asia or binary bets on the value of Yen on Thursday, and it seems unlikely that people who are extremely passionate about the causes they and their friends participate in ahead of a vast range of other causes that nominally claim to do good achieve a greater level of impartiality. Pascalian odds seem particularly unlikely to be representative of the true best option (in plain English, a 0.0001% subjective probability assessment of a 1 shot event is roughly “I don’t really know what the outcome of this will be and it seems like there could be many, many things more likely to achieve the same end”). You can make the assumption that if they appear to be robustly positive and neglected they might deserve funding anyway, but that is a portfolio argument...
Feels like the most straightforwardly rational argument for portfolio diversification is the assumption your EV and probability estimates almost certainly aren’t the accurate or at least unbiased estimator they need to be for the optimal strategy to be to stick everything on the highest EV outcome. Even more so when the probability that a given EV estimate is accurate is unlikely to be uncorrelated with whether it scores particularly highly (the good old optimiser’s curse, with a dose of wishful thinking thrown in). Financiers don’t trust themselves to be perfectly impartial about stuff like commodity prices in central Asia or binary bets on the value of Yen on Thursday, and it seems unlikely that people who are extremely passionate about the causes they and their friends participate in ahead of a vast range of other causes that nominally claim to do good achieve a greater level of impartiality. Pascalian odds seem particularly unlikely to be representative of the true best option (in plain English, a 0.0001% subjective probability assessment of a 1 shot event is roughly “I don’t really know what the outcome of this will be and it seems like there could be many, many things more likely to achieve the same end”). You can make the assumption that if they appear to be robustly positive and neglected they might deserve funding anyway, but that is a portfolio argument...