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.
It really helps if you define “value” in a material sense, rather than an abstract numerical figure.
The utility of money has a diminishing return at extraordinary volumes. But I could see a contrary scenario:
You are broke. You can receive:
-
Half the money you need for a life saving operation.
-
A 50% chance for all the money you need.
- Half the money you need for a life saving operation, and a shiny button
-
The set of things I can do with 20T but not 1T is very small
10T*
*10T + half a shiny button
1T turns into 20T pretty quickly if you know what you’re doing honestly.
Why would I ever want to turn 1T into 20T? What difference does it make?
It’s much more useful to find some ways to spend 99.99% of it to improve your surroundings. The number on your bank account will still be indistinguishable from the original.
Yeah but you’re a sane person, not a billionaire.
Oh of course, just the question is moot regardless is my point. 20T can buy many peanuts.
Speaking from experience, I guess.
Nah but I’ve noticed stupid people with money keep becoming stupid people with more money. I figure it can’t be them doing it.
Game:
This skill has a 50% chance to deal a critical hit, or completely miss!
“You mean, critical hits which deal something like 30% extra damage?”
I actually like it when games do that sort of thing, keeps you on your toes, shoutout to Backpack Battles
Sometimes you can tell Zach is very active on Bluesky – they’ve been yelling at each other about a study where people were offering $50k vs a 50% chance at $10m that I am very grateful hasn’t been getting play on fedi.
edit: what have I done
edit 2: to be fair they are actually fighting over $50k vs $1m and I just have a terrible memory
That one is actually very hard and not a simple no brainer. 50k is good but not live changing much. 10M would completely change the live, even allow one to never work again and still have a decent living standard.
50k could be life changing for a lot of people. That could pay for a decent chunk of education/training, be used to start a business, or cover a deposit for a home. All major steps up for those currently struggling.
What business is 50k starting?
There are a lot of businesses that cost so little to start it may as well be nothing. But you need to eat until they get off the ground.
A very small one.
But, say, you need enough for a down payment on a truck and lawn / pool supplies, you’ve got yourself a business.
That’s funny. All one has to do is move out of one of these crappy western countries with all their social issues and corrupt governments, skip the 10M, and understand a decent living standard isn’t about quantifiable material conditions. Even 50k would be life changing in most of those places.
So which county is better or good?
Moving to another country is not really that easy.
Nobody said it was easy.
The phrase “all one has to do” implies ease.
No. It implies taking action rather than sitting and waiting for “one day”. That day never arrives.
And… move to a non-Western country with social issues and a corrupt government? What fairyland are you proposing?
Haha enjoy your Kool aid buddy
All one has to do is move out of one of these crappy western countries with all their social issues and corrupt governments
The Western countries are the ones with all the accumulated infrastructure.
Are you sure about that? Or is that a narrative you’d like to believe because it supports Western “greatness”? Plenty of non-Western countries have financial and physical infrastructure that rivals anything seen in Europe or North America.
Or is that a narrative you’d like to believe because it supports Western “greatness”?
It’s the profits of Western imperialism. For all the talk of Free Markets, the US has insoourced critical manufacturing for a host of products. Especially high margin technologies.
The US can build cars at a global scale because it can make every compartment of the car in house. Honduras and the Philippines and Azerbaijan and Egypt simply can’t do that.
Wait, what? That seems so trivial. As a sanity check (and assuming I’m reading this right): unless you’re utterly destitute or you’re ground floor on some insane, foolproof investment opportunity but have no spare capital, you literally always go for the expected $5 million, right?
I’d 100% take the guaranteed 50k. 50k would help me enough that I’m not willing to risk the 50% nothing.
Yeah, the ratio of this dilemma is an interesting one. If it was a guaranteed 5 million or even 500k, I’d damn well take the guaranteed option. I also hate leaving things to chance. Even as a fraction of the 10 million, either of those would be life changing.
But for 50k, I’m not so sure. It’d help iron out a few immediate financial wrinkles, but it wouldn’t change anything I’m doing today. I’d still be going to work, still keeping my expenses the same, and keeping my living situation as-is. So it wouldn’t ruin me to have 50k less to spend, I just wouldn’t be able to pay off loans or accrue savings as quickly without it.
And then I think that if I were to take the guaranteed sum, I’d end up lying awake at night wondering what could have been if I’d gone with the 10 million and won the coin toss. That might end up eating me up inside.
I also hate leaving things to chance.
But that’s a security bias. If you were more prone to risk taking, you’d be doing the opposite even if the payout was - say - $150k. Or even $75k.
And then I think that if I were to take the guaranteed sum, I’d end up lying awake at night wondering what could have been if I’d gone with the 10 million and won the coin toss.
This all seems to boil down to psychological impact rather than material benefit.
I understand the justification but just don’t think it holds in 2026 unless you’re in a worse position than even paycheck-to-paycheck. 50% is solid odds for that reward, there’s a difference of two orders of magnitude, those two orders of magnitude are actually meaningful, and $50,000 in 2026 money is “tread water a little more comfortably for a while” money while $10 million – 200x more – is still “invest and go do whatever you want” money.
It’s all about your current situation. For a lot of people 50k could be what they need to get out of an immediate bad spot that could start to spiral (credit card debt etc.), and give them the needed breathing room to stabilise their situation.
For my own part, I would probably just dump the 50k directly into my mortgage in order to reduce my recurring expenses a bit. It would make me live a bit more comfortably, but wouldn’t be life changing in any way. In other words, I would probably flip the coin. However, I can definitely understand why someone else would choose differently.
If it’s 50k untaxed, now we’re talking. It’s not like a 50k bonus for one year, where you only see a portion of it.
I think this question is more a mirror of your current life situation. A lot of people would take the 50k, and I don’t blame them. That money might get them out of a doom poverty spiral — they can fix their car, pay off credit card debt, etc…
Personally; I’m retired, earn almost nothing, but also spend almost nothing. I’d go for the coin flip, and if I win, give it to my family or charity or something.
It’s also a little like the trolley problem. Like 50% chance sounds good, but it sounds too good to be true? In a way?
Like real life is rarely, if ever, as clear and specific as the trolley problem. What works there, doesn’t necessarily translate to real life.
Just with RNG, videogames, dnd and any kind of gambling is already super fucked off of really good odds. I’ve experienced failure on multiple dice rolls where I had a 75% chance to succeed.
It really spoils you to risk aversion.
a study where people were offering $50k vs a 50% chance at $10m
That’s very different than $10T v $20T.
But I’d also like to know who is running around giving away all this money to begin with.
The premise is fanciful no matter how you slice it.
Any multi-millionaire on lemmy (what?) wanna buy my 50% chance?
If 50M is success I will give you 90% of it, but if it’s failure then you will give me 50K
Wasn’t that the whole deal of SBF? I think he said if he could flip a coin between destroying the world or making it more than twice as good, he’d do it. And then he loaned other people’s money to himself to gamble on it.
This is referenced in the alt text, I looked it up:
https://finance.yahoo.com/news/sbf-dangerous-decision-making-philosophy-124600175.html
Yet when asked exactly that in a March 2022 podcast with Tyler Cowen, Sam Bankman-Fried (SBF) was quite willing to play that game–and keep playing it, over and over again. Cowen asked SBF about the high likelihood of destroying everything by going double of nothing on a series of coin flips. SBF responded that he was willing to make this trade-off for the possibility of coin-flipping his way into “an enormously valuable existence.”
Fortunate that he went bust on only a few billion worth of stolen money and not the fate of humanity, though the same can’t be said for the rest of the delusionally arrogant megalomaniacs running things
Fortunate that he went bust on only a few billion worth of stolen money and not the fate of humanity
SBF could only exist as a high stakes gambler because he kept getting stacked by equally buffoonish, but less famous, bank executives.
SBF crapped out. The gambler mindset persists. We just have one less idiot rolling dice.
Will you give this opportunity to 100 of us? Because we will be pooling our wins. If so, the latter, if it’s just me, the former.
Even if only one person wins the coin toss that’s 100B per person, which is 99B more than you could ever reasonably spend in a lifetime.
No, I think it’s 100B more
Well,
There are expensive things. Planes for example.
One guy spent $1B on a home in Mumbai.
I will take the first option and agree to pool anyways in the rare case that the rest of 99 all loses the flip
I feel like it is usually logical though lol. This is kinda the one situation where it’s not because you don’t really need more than 10 million anyway.
Unless you really wanted that button.
Risk intolerance is logical. EV modeling does not take that into account, which is the joke here.
This would apply to any situation where the lower value is sufficiently “enough” and the odds are better. Once you cross the threshold of enough, taking worse odds for more is nonsensical.
Imo in any situation where you are choosing risk/reward preferences it’s important to consider how much different levels of reward will actually benefit your life. I think in most cases losing everything you own is going to be more bad than doubling your wealth is good, and so it’s a bad idea to only consider the alpha of an investment. Or it could be the other way around, maybe someone desperately needs to escape their shitty job, so for them a very risky investment that actually has lower effective value than the safe investment is the more rational choice.
Which isn’t to say discount EV entirely, that’s how you end up at bad decisions like buying a lottery ticket.
EV is meaningless in any situation where you only get 1 chance.
It only becomes relevant if you repeat something enough for the law of averages to work out
Do you take a guaranteed $1 or 50% chance at $10? Suddenly EV is meaningful.
Depends on how many times i can flip the coin.
depends on where the ten trillion came from.
directly from a bunch of people’s lost wages?
stolen from a casino?
mafia?
a single trillionaire who stole wages?
several billionaires who also stole wages?
a family of entitled brats?
trillions of dollars is dirty no matter how you slice it.
It’s a genie so it just enters circulation into your bank account and hopefully doesn’t start a cascade of hyperinflation 👍
a genie? where’d this genie come from?and how is he getting the money?
Jinn are slaves, you’re benefitting from slavery. Did we not watch Aladdin as kids or something?
This isn’t even the original questions I’m asking ffs. What the hell is this in response to? I’m not the one invoking jin here. Not even the original post we are responding to invoked genies so I have no idea what this slop is about.
Are you and the above poster AI bots that got lost and don’t understand how conversations work??
None of this answers my original questions. Enjoy my ignore list you AI slop generators.
But the whole thing is that you’re freeing them, is it not? That’s what you’d be benefiting from.
I’m some stories yes you could free them and in others not so much.
if the thing giving the choice was considered trustworthy by lenders it might be possible to trade the 10T ev for 5T guaranteed.
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If you suddenly spent ten trillion dollars. If you don’t spend it, it might as well not exist.
If it’s in cash, sure
If it’s in a bank account… the bank spends your money :P
https://www.celebritynetworth.com/articles/entertainment-articles/1-trillion-dollars-look-like/
You got me thinking what that’d look like. The picture of the guy next to the pallet of cash kind of looks like ai, but it still seems at least close enough. And the article only shows up to 1 trillion, not the 10 we were talking about.
You’re underestimating how many dollars are in this world
Or they are just a gambling addict
