...because scope insensitivity doesn't cancel out

[thezvi]

There is the problem of people pushing downside risks, especially unlikely but large ones, onto taxpayers, shareholders or others. If you win, great, you've won, and if you lose big, whoops, oh well, sorry guys

Comments

[bateleur]

We can't fix the downside risk problem because our society has decided it's unethical to inflict large downside risks on people.

In its most general form this is true, but we can greatly reduce the effect in a large majority of cases that arise in practice.

The basic idea is: If someone creates a large cost by trying something which fails, protect them from the downside but ban them from taking similar risks again until they've fully paid off the cost of the first failure (ie. probably never).

Of course, it's politically impossible that this approach could ever be applied to, say, directors and officers liability insurance. But the fact it can't happen in practice isn't necessarily the point - that limitation applies to a lot of things.

[celandine13]

Maybe this connects to your previous post