4 ms·
There is a world of difference between the calculated risk of investing in a car company and the blind volatility of a spin of the roulette wheel.
by new_realist 6y ago
There is a world of difference between the calculated risk of investing in a car company and the blind volatility of a spin of the roulette wheel.
- rowanG077 6y agoNot really. A spin on the roulette wheel is also a calculated risk.
- chii 6y agoA house-odds game is always going to be a bad bet. If you really did do a calculation, you'd avoid them completely.
- rowanG077 6y agoNot really. There are completely valid reasons to take a bad bet if you have no better alternative. Or, of course, for sport.
- chii 6y agoIf you take into account personal enjoyment, then yes, house-odd games can be good - after all, it's fun to play 'em. But purely financially, they are a terrible bet. > a bad bet if you have no better alternative. there's always a better alternative. For example, putting the money in a bank account with interest. Or placing it into an index fund.
- jon-wood 6y agoThere isn’t always a better alternative. Almost always, yes, but not absolutely always. Admittedly we’re deep into edge cases here. The only one I can think of is that you have $1,000 today, and need $100,000 by tomorrow. Maybe someone is holding your cat to ransom, and you really love that cat. No one is going to loan you a hundred grand to give to catnappers, so you go to the casino hoping for some really good luck as you put everything on black. Good luck, Mittens.
- naniwaduni 6y agoUtility of money is nonlinear. Usually people point to its asymptotic sublinearity, but at smaller scales the value of money has all sorts of spikes when you hit threshold values. The upshot of which is that even bets with negative expected value can have positive expected utility depending on where you are on the curve.
- deleted 6y ago[deleted]