= 27d567bc2d48d9f40e9ccc20ea370b15)
Alicorn comments on Misleading the witness - Less Wrong
You are viewing a comment permalink. View the original post to see all comments and the full post content.
= 783df68a0f980790206b9ea87794c5b6)
Loading…= b715d02e85f7b3b4ae65ca3d3e450868)
Subscribe to RSS Feed
Powered by Reddit
= f037147d6e6c911a85753b9abdedda8d)
You are viewing a comment permalink. View the original post to see all comments and the full post content.
Comments (112)
Another possible sane motivation for taking the $500 is a familiarity with how commonly lottery winners find their lives ruined by the sudden influx of cash.
It's possible but doesn't seem very likely, since given the choice between $1M outright or $500 outright, those same people would almost certainly take the $1M.
I think a more likely explanation is that they conceptualize the problem as having to choose between "probably getting $0" and "certainly getting $500".
Of course that's it. $500 is a lot to pay for a lottery ticket, even one with as high a chance of winning as this. Change it to a certain $20 and a 15% chance of $40,000, and I bet (heh) that many more people will take the chance then.
Well, I don't buy this in general, but I do know one person who would do this. I was talking with her recently about a lottery winnery who won some huge sum, maybe $100M, and she said, "But it ruined his life." And I said, "Why? What happened?" And she said, "Oh, I don't know what happened. But I assume it ruined his life."
In her mind, I think she had already taken her high prior for B, assumed B, and converted the non-incident into further evidence for B. She did laugh at herself when she realized she'd done this, so there is hope. :)
Being aware of that tendency should make it possible to avoid ruination without forgoing the money entirely (e.g. by investing it wisely and not spending down the principal on any radical lifestyle changes, or even by giving all of it away to some worthy cause).
Unless there's akrasia involved. I can only imagine how tempting it would be to just outright buy a house if I were suddenly handed a million dollars, no matter how sternly I told myself not to just outright buy a house.
And the best workaround you can come up with is to walk away from the money entirely? I don't buy it.
If you go through life acting as if your akrasia is so immutable that you have to walk away from huge wins like this, you're selling yourself short.
Even if you're right about yourself, you can just keep $1000 [edit: make that $3334, so as to have a higher expected value than a sure $500] and give the rest away before you have time to change your mind. Or put the whole million in an irrevocable trust. These aren't even the good ideas; they're just the trivial ones which are better than what you're suggesting.
Ha! Buying a house and even more so moving is hard work, even with hired help. No way I'd do that right away.
Given a million-dollar windfall, buying a house at today's depressed prices would be one of the best investments you could make. (An additional benefit would be to make the money less liquid, thereby cutting down the temptation to spend it frivolously.)
Perhaps, but owning a house would be a terrible time investment for me the way my life is working. I suppose I could hire a property manager and rent it out, though.
How sure are you that you know more than the market on this one? What information do you have that (still) rich property speculators don't have?
Housing markets aren't even theoretically efficient. Too big, diffuse, illiquid, etc.
ok, but are you arguing that Matt's skepticism is unwarranted? are you heavily invested in realestate?
Don't forget bad zoning regulations: http://www.heartland.org/publications/environment%20climate/article/10635/Landuse_Regulation_Makes_Housing_less_Affordable_Harvard_Study_Finds.html
So they should keep $10,000 if they win. Or just sell a stake in the winnings to a less risk-averse third party for $10,000, risk free.
What $10,000?
EDIT: Never mind; I thought he said "the $10,000".
You could probably sell somebody a 15% chance to win a million bucks for 10k. It's worth fifteen times that to a risk-neutral agent.
I'm pretty confident that you could sell a true 15% chance to win a million bucks for a lot more than 10k... after all, investment banks make substantially greater gambles regularly.
I'd probably ask for 100k to start and go from there.