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simpleton comments on Misleading the witness - Less Wrong
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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