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You normally wouldn’t discount linearly. But that doesn’t mean you can’t put a price on it. There’s a limit to how much you’d pay for insurance, for example. So
by DavidSJ 7y ago
You normally wouldn’t discount linearly. But that doesn’t mean you can’t put a price on it. There’s a limit to how much you’d pay for insurance, for example. Some risk is part of life.
- mlyle 7y agoI didn't say one can't put some price on it. I said "maybe a huge amount" in comparison to someone saying that perhaps one would value it at $5k. $5k this year is small compared to future potential career earnings; not much of a difference in probability of losing those is required to far exceed $5k. Just strict linear expected value could be bad, let alone when one weights the risk and volatility.