The risk also needs to be considered separately, though. For example, which of these is better compensation?
$100,000/year
or
Each year, there is a 0.1% chance that you will be paid $1 billion.
Simple math tells us that the second one has a 10x higher expected financial outcome. But few people would actually consider that to be better compensation. Lower risk is better, to an extent that can outweigh a higher expected financial outcome.
If you get both a better expected outcome and lower risk, that's two benefits, not just one.
I think once you take into account our relatively short biological lifespans (and the subsets of them in which we are healthy and fit to do whatever we like even shorter), the second option just doesn't make any sense for most people. There is value in having $100k now.
I'm not sure if it's safety, or a knowledge that risk assessment also has to take into account the risk that your assessment is wrong. How can anyone make a prediction of any 0.1% chance? The accuracy of the information going into combines in all sorts of horrible ways, and not likely to your advantage. There's no hypothetical in which that chance would make sense, in which it would be calculable and accurate, so instead we intuitively mark it as simply foolishly optimistic belief.
Plus, if you really did have solid odds, you could sell those odds, i.e., have someone invest in you.
I'm sorry, but there is a 0% chance that an employee will be paid $1 billion. An employee is just a hired hand and has zero control and zero information about how money is being distributed. Once that kind of money is on the table, there would certainly be some way for people controlling the company to change that outcome, so an employee will never see that kind of money. And it will be done. Just business. Nothing personal.
Well that's the whole point - the realistic numbers are more like a choice where you (A) receive $100k now; or (B) receive a 1% chance of 5 million; where the (B) option is worse in all aspects, both higher risk and lower expected value.
$100,000/year
or
Each year, there is a 0.1% chance that you will be paid $1 billion.
Simple math tells us that the second one has a 10x higher expected financial outcome. But few people would actually consider that to be better compensation. Lower risk is better, to an extent that can outweigh a higher expected financial outcome.
If you get both a better expected outcome and lower risk, that's two benefits, not just one.