Quantifying AI Risk Decisions: Tail Risk vs. Expected Return in Musk's Bets

According to a 2023 survey by AI Impacts of global AI researchers, respondents estimated the median probability of AI causing human extinction (an extinction-level event) at 5%, while the median probability of it bringing about "extremely positive transformation" (such as universal abundance) was 60%. These two sets of numbers perfectly outline the mathematical framework behind Elon Musk's recent statements—he acknowledges that disaster risk is "not zero," but believes it is worth continuing to push forward. From the perspective of quantitative trading, this is essentially a position management problem: facing an asset with extremely high variance and asymmetric returns, what is your optimal position size?