Second lottery poll

[Colymbosathon ecplecticos]

This time you have a choice between:

A) 1 Million USD with probability = 100% or

B) 2 Million USD with probability = 95% ($0 otherwise)

Again, no selling of shares, just A or B.

[ActWaryAlways]

A.

It doesn't matter that the expected value of B is $1.9m. I just want that cool cash.

[Brock]

Economic and Financial Decisions under Risk (http://www.amazon.com/Economic-Financial-Decisions-under-Risk/dp/0691122156/ref=sr_1_1?ie=UTF8&qid=1310571602&sr=8-1) by Eeckhoudt et al.

[GargoyleWaiting]

A
1 million is enough to pay off my debts, but I'd still have to work. Same situation with 2 million. Not worth the small risk of getting nothing.

[abt5]

1 million i can buy a shit house.
2 million i can buy a better shit house

[Mr. Micro]

A. Stupid risk averse self.

[tommie frazier]

B

[snikelfritz]

B

2 mill would be enough to stop working for a while while I decide what I really want to do. 1 mill isn't enough for that, so the 5% risk of failure is sufficient, I may take as low as an 80% win percentage, but not lower.

[Evol ded]

I need no money. The first would make a nice gift. I do not like making contingent gifts.


No. You can not have it.

[Chronus]

B, with 95% chance I wouldn't regret it too much if I got extremely unlucky and ended up with the 5% that got zero.

[Agadefe]

A.

The difference between 1 and 2 million is not very large imo. Might as well take the sure thing.

[Skizzmata]

B. 95% is close enough to a sure thing.

[ditkaworshipper]

A. The numbers are equally life changing for me. I could get a turbo 911 and downtown condo with that kind of cash and still have a good nest egg to get the $2M.

[bananadotcom]

I'm sure you're all shocked, but A for me.

[snikelfritz]

I'm sure you're all shocked, but A for me.

You couldn't live with a 5% chance of failing? What about 0.5%?

[ReserveRage]

B. Utility curve is below the indicated 1.9M EV but still above 1M

[tgadd]

I would take the 2mil risk.

[bananadotcom]

You couldn't live with a 5% chance of failing? What about 0.5%?

1-2% is my break-even point.

[Actuary321]

Is this taxable or tax free?

[Colymbosathon ecplecticos]

18-20:

I guess I'm pretty good at setting the O/U at 95%.

[Ginormous76]

You couldn't live with a 5% chance of failing? What about 0.5%?

I'm one of the most unlucky people in the world. I will take the sure thing.

[snikelfritz]

I'm one of the most unlucky people in the world. I will take the sure thing.

Interesting, please see my other thread on luck. I think I'm lucky enough that I'd go for it (plus as stated earlier 1m won't be life changing, but 2m would be just enough).