I have a question about an example referenced in the Bloomberg article linked from a previous discussion [1]. Quoting from the article: > He began with his ow

I have a question about an example referenced in the Bloomberg article linked from a previous discussion [1]. Quoting from the article: > He began with his own students, telling them to imagine that by attending his lecture, they had exposed themselves to a rare fatal disease. There was a 1 in 1,000 chance they had caught it. There was a single dose of the antidote: How much would they be willing to pay for it? > Then he asked them the same question, in a different way: How much would they demand to be paid to attend a lecture in which there is a 1 in 1,000 chance of contracting a rare fatal disease, for which there was no antidote? > The questions were practically identical, but the answers people gave to them were -- and are -- wildly different. People would say they would pay two grand for the antidote, for instance, but would need to be paid half a million dollars to expose themselves to the virus. Would classical economics really predict that people would give the same answers to these two questions? The article claims the two situations are "practically identical" but to me they seem clearly different: it makes perfect sense to me that many people would pay less of their money for the antidote knowing they've been exposed vs. the amount they'd need to be paid to voluntarily expose themselves to the risk. As a simple example, if one only has $1000 to their name, then $1000 is the max they could possibly pay for the antidote (assuming they can't get a loan), yet I'd expect that most wouldn't be willing to expose themselves to that risk just to double their money. I thought utility theory in classical economics recognized that the marginal utility of going from $1000 to $2000 is less than the marginal utility of going from $0 to $1000. [1] https://news.ycombinator.com/item?id=15432905 https://news.ycombinator.com/item?id=15432905