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thomblake comments on Misleading the witness - Less Wrong
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Re. the linked article about the cognitive confusion test:
Wow. That's the most mind-blowing thing I've read in a while. I can't think of a good explanation for anyone picking the $500, let alone the male-female difference. Maybe they assume that someone might actually give them $500, but the $1M is a scam. And how does this square with the idea that poor people play the lottery more?
Princeton students scored a mean of 1.63. Heh.
I agree with Vladimir Golovin. I definitely think this way - I can think immediately of how useful $500 would be to me, but cannot think of many ways to use a 15% chance of $1M.
Well, I can think of one way - I would take the 15% chance of $1M and then sell it to one of you suckers for $100,000.
Show of hands - who really has $100,000 that they could free up to buy this from thomblake? Personally, I don't think I actually know what 100k is worth to me because I have never had my hands on that much money.
Actually, if he has the $1M, I'm in. I don't have $100K liquid in any normal sense but I could certainly raise it for such a deal and divide the risk and return up among a few people.
He does not have (even in this hypothetical situation) a million bucks. Hypothetically, he's being offered a 15% chance of winning a million bucks.
Incidentally, in a staggering display of risk aversion, I asked a friend how much she'd pay for a 15% chance of a million dollars and she said maybe twenty bucks because those did not seem like "very good odds" to her. -.-
I don't have $100,000. I only have about $30,000.
Just how much is a one in seven chance of a million dollars worth to everyone here, anyway? (Offer me a near certainty of $70,000 and I'd start to have second thoughts about taking the gamble.)
Exactly. If someone has $1.1M, spending $0.1M on a 15% chance of $1M is a good deal. Someone who has $0.05M and has to go into debt to buy the 15% chance is very probably insane.