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One difference is that the amount of starting capital matters. Say someone tells you that you can spend a million dollars for a 1% chance at a trillion dollars.
by gbear605 8y ago
One difference is that the amount of starting capital matters. Say someone tells you that you can spend a million dollars for a 1% chance at a trillion dollars. That makes perfect sense for Apple, but I’d question your judgement if you throw your life savings into that gamble. That’s because the value of a marginal dollar is worth a lot less when you already have a lot of money. To see another example, consider the value that Bill Gates gets from having an extra $100,000 (essentially none) versus a homeless person (life changing).
- AnthonyMouse 8y ago> One difference is that the amount of starting capital matters. Well, yes and no. If you're incommunicado in some kind of locked room with a timebombed offer, sure, if you can't afford to lose the money you say no. But if someone actually offered you a 1% chance at a trillion dollars for a million dollars, you take the offer and then immediately sell the company that owns the contract for ten billion dollars and pocket the ten billion dollars. Or sell half of it for five billion dollars and keep the other half.