HUMANS PREDICTABLY OVERESTIMATE THEIR CHANCE OF SUCCESS FOR LOW-PROBABILITY EVENTS
More than one important paper in empirical finance has demonstrated this effect. Stocks with lottery characteristics tend to be over-priced.
As pointed out by Bali, Cakici and Whitelaw in their much reference paper Maxing Out: Stocks as Lotteries and the Cross-Section of Expected Returns; investors tend to irrationally over value lottery-like speculations and assume the probability of success is higher than they in fact are. For this reason investors in such stocks experience relatively low risk-adjusted returns.
This may explain why option prices, that tend to be set by more sophisticated investors imply a price for NNVC that is considerably below the current market price.
This also explains why a Randy Mills can extract so much money from private investors for an idea that is provably wrong. As mentioned before, there is no way for Quantum Mechanics to be wrong, a central contention of Mills and for devices based on computer chips and lasers to works as flawlessly as they do. Every day in hundreds of ways the average person sees clear cut evidence that QM is right and Mills is wrong.
The only issue is this: Is Mills a crook or a crack-pot. The former knows it's snake oil, the latter does not.
Beware of the lottery-effect.
Trendliner
