Heads we win, tails you lose, fracking edition

If you have followed this blog long enough you will know that I am an unabashed fan of the life and work of Nassim Nicholas Taleb, pugilistic social media presence and all. There is no simple way to summarize why — this post from the economist Branko Milanović is as good of an attempt as any — and reducing his Incerto series of books to a collection of One-Neat-Tricks (Ergodicity! Lindy! Skin in the game!) would not do them justice. Having said that, here is One Neat Trick: when deciding to act, think about the best-case and the worst-case scenarios and try to pick one with known and limited downside and a potentially unlimited upside. The classic example here is buying stock options: for pennies on the dollar you purchase the right to buy stock at a certain price by a certain date. If the stock costs less than that price by the time it expires your only loss is the price of the option. But in the unlikely but possible case it skyrockets, you can pocket a good chunk of change. ⊕…