3 ms·
Behaving on expected value is not rational.
by aristidb 16y ago
Behaving on expected value is not rational.
- dirtyaura 16y agoExactly. Choosing between a) 100% chance of $10 vs 10% chance of $100 is very different question than choosing between b) 100% chance of $100K vs 10% chance of $1M. or c) 100% chance of $1M vs 10% chance of $10M. I think many people will choose 10%/$100 combo of a) just for the thrill. The latter two are of course dependent your financial situation, but hit an interesting sweet spot for YC crowd. What would be your choices?
- joshu 16y agoAs I said in another comment, i tested this exact question out on mechanical turk: http://joshua.schachter.org/2008/09/amateur-economist.html http://joshua.schachter.org/2008/09/amateur-economist.html
- llimllib 16y agoBehaving based on expected value is the only rational choice.