Status Updates From A Treatise of Human Nature,...

Note 2/2:

But I also have a simpler explanation - when you see someone in extreme misfortune, there is little chance that he would converge with your standing to rival you, hence you feel sympathy. A man with SLIGHT misfortune, however, could reasonably rise up again to be your competitor and thus bruise your ego.

Note 1/2:

I certainly agree with Hume's striking observation of the contradiction that we feel contempt and dislike when we see slight misfortune in others, but, strangely, compassion and tenderness when we observe great misfortune; and his explanation that it is because we feel uneasiness via imperfect sympathy for slight misfortune, and this uneasiness produces aversion.

Note 2/2:

'The smallness of the probability is compensated by the greatness of the evil' - which is why risk-averse investors over-price/ over-hedge (relative to the real probabilities) disaster risk!

Note 1/2:
This entire passage, P 1.15, Bea 5, could be quoted verbatim into an asset pricing textbook. This is the key asset pricing insight: that risk aversion is equivalent to paying more attention to bad states relative to the real probabilities, i.e. the probability twist.

Note 2/2:

It is obvious that, as long as the odds are not 100% certain, one will fear and hope. Let's say I have a 60% chance of getting fired - I would be in deep fear. Even if it were just 1%, I would fear for that 1%.

So fear and hope don't only arise when the odds are 50-50.

Note 1/2:
Interesting theory as to the origins of fear and hope (i.e. PROBABILITY), but I find it self-evident that Hume's subsequent claim that 'the passions of fear and hope may arise, when the chances are equal on both sides, and no superiority can be discovered in one above the other'.