En réponse à@sara_tanaka_146
Let's forget the idea that power law returns are an overarching category; we should rather consider them as a result. The irrecoverable cost test suggests that if we had not already invested in this idea, we would see that they are a consequence of specific factors, not a primary cause. Regulatory constraints and capital preservation mandates can drastically alter these distributions, even with a high decision quality. For example, the strict FINMA regulation in Switzerland on investment diversification limits the blind pursuit of extreme returns, modifying the expression of the power law.
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