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brazil84 comments on Outside the Laboratory - Less Wrong
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"Now suppose we discover that a Ph.D. economist buys a lottery ticket every week. We have to ask ourselves: Does this person really understand expected utility, on a gut level?"
Tricky question. It we look purely at the financial return, the odds, then no. If we look at the return in utility, possibly yes.
Is $1 too much to pay for a couple of days of pleasurable dreams about what one would do if one won? Don't we think that such fleeing from reality has some value to the one entering such a fantasy, a suspension of the rules of the real world?
If we don't agree that that has some value then it's going to be terribly difficult to explain why people spend $8 to do to the movies for 90 minutes.
Yes, I agree. Part of my brain does not understand the difference between a small chance of something happening and a really small chance of something happening. Probably the same thing is true of most people, including PhD economists.
It's doesn't seem unreasonable to spend $10 a year to humor one's inner moron.
It might be a different story if those same PhD economists were spending thousands of dollars a year on lottery tickets. But even then, the most likely explanation is that the PhD economist has a gambling problem. And like most addicts, he knows that he's behaving irrationally; he just has a hard time controlling himself.