The Conviction Fraction
f* = (mu - r) / (gamma x sigma^2). The fraction of capital you commit to a bet: the edge over the hurdle, divided by risk aversion times variance. It is the Merton optimal risky-asset weight under CRRA utility; the Kelly criterion is the special case where risk aversion goes to 1 (log utility). A bigger edge or tighter evidence raises the size; more variance or more caution shrinks it.
Why It Exists
The Scientist produces the posterior - the estimate of the edge, the variance, and the tails. The Allocator supplies the risk aversion - how much of that conviction to turn into position size. Together they answer the only question left once you have an edge: how big. Size the position to the strength of the evidence, not the strength of the feeling.
Related Terms
Oracle Gradient - The computed vector from your current performance toward the unobservable optimum in a domain's performance space.
Causal Yield - yield = E[Y | do(X=1)] - E[Y | do(X=0)].
Portfolio Alpha - The excess return that exists only when the allocation decision and the operating execution are both right.