Why do people guess? Statistically there's no benefit?

pckeller
Tue, 30 Sep 2014 01:41:22 +0000

It’s just that it is not always irrational to choose the option with lower expected value. Not every dollar is equally valuable to you. The first $100,000 is worth more to you than the next. For example, you could offer me $1,000,000 now or a 30% chance at $10,000,000 later. I know that the expected value of that chance is $3,000,000 but I also know that I am choosing the guaranteed $1,000,000 – a life changing sum! But if you offer me $100 now or a 30% chance at $1000 later, well then I would take my 30% chance. Am I being irrational either time? I don’t think so. But it is an interesting game to ponder.