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Why We Underestimate Risk by Omitting Time as a Factor

July 8 (Bloomberg) -- Suppose I offer you a simple gamble. Throw a dice: If you get a six, you win $10; if not, you lose $1. The loss is more likely; the win brings more money. Willing to play?

The generally accepted way for deciding in such cases -- developed originally by the French mathematician Blaise Pascal in the 17th century -- is to think of probabilities. The outcome will always be a win or loss, but imagine playing millions of times. What will happen on average?