Meanwhile, you ask a near trillionaire to pay even 10% taxes and they act like you’re actively breaking their legs and throwing them onto the street to starve.
You see the expected value fallacy thing pop up in real life when the lottery hits big digits. “Did you hear? The jackpot is over $1 billion! Let’s go buy tickets.”
Let’s be real, after $100 million, or honestly even $10 million, increasing the jackpot doesn’t change how much effect that money has on your life very much. At that point, likelihood is a lot more important.
But every time the jackpot peaks, it’s like all of these intelligent, thoughtful people around me lose their ability for rational thought. Why would you buy a lottery ticket now, but not when the jackpot was $500 million a month ago?
You can still reason about expected value in this situation, just $ is not really what you want to optimize for.
When you view it as “100% chance of being able to afford anything” vs “50% chance of being able to afford anything” it becomes more clear.
Meanwhile, you ask a near trillionaire to pay even 10% taxes and they act like you’re actively breaking their legs and throwing them onto the street to starve.
Marginal value of money at 10T is almost zero.
Yeah, it’s obviously logarithmic or something. There is diminishing value in money. I think the way you put it makes it very intuitive though.
Yes, in financial theory it’s called a “utility function”. Log functions are frequently used to represent risk averse patterns.
You see the expected value fallacy thing pop up in real life when the lottery hits big digits. “Did you hear? The jackpot is over $1 billion! Let’s go buy tickets.”
Let’s be real, after $100 million, or honestly even $10 million, increasing the jackpot doesn’t change how much effect that money has on your life very much. At that point, likelihood is a lot more important.
But every time the jackpot peaks, it’s like all of these intelligent, thoughtful people around me lose their ability for rational thought. Why would you buy a lottery ticket now, but not when the jackpot was $500 million a month ago?
At least some of them are just having fun with it, they don’t really expect to win anything.