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The magic trick is it protects you from ruin. EV is negative for this one bet but not for the whole budget.
by baq 2y ago
The magic trick is it protects you from ruin. EV is negative for this one bet but not for the whole budget.
- tptacek 2y agoRight; there are all kinds of positive-EV bets you should never take. Heads you win $50,000,000; tails I get $500,000 and your house. Insurance isn't so much about expectation as it is about marginal utility.