Exactly. This is the economic principle of "marginal utility" -- see http://en.wikipedia.org/wiki/Marginal_utility http://en.wikipedia.org/wiki/Marginal_utility

Exactly. This is the economic principle of "marginal utility" -- see http://en.wikipedia.org/wiki/Marginal_utility http://en.wikipedia.org/wiki/Marginal_utility The principle is that I'm willing to buy a lottery ticket, even though the odds are slanted (the agency takes a large cut) because the $1 the ticket costs me is meaningless to my life, but the $1 million I might win would fundamentally change my life. The is why people buy insurance: the $1000 I spend every year on homeowner's insurance hurts only slightly, but the amount that I'd lose to a fire would destroy me financially. It's also the rationale for burglary: the thief is very likely to make a large sum of money, while he only has a small chance of a devastating loss (i.e., going to jail). The question is all wrapped up in the relative size and likelihood of the events, where the size is judged relative to the difference that it makes to you.