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9eB1 comments on Open Thread - Aug 24 - Aug 30 - Less Wrong
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Suppose someone offers you the chance to play the following game:
You are given an initial stake of $1. A fair coin is flipped. If the result is TAILS, you keep the current stake. If the result is HEADS, the stake doubles and the coin is flipped again, repeating the process.
How much money should you be willing to pay to play this game?
I was thinking that you should take into account the fact that if you got several trillion dollars, that only entitled you to half of America's resources, and if you got infinite dollars it would only give you 100% of America's resources. It turns out that similar notions have already been studied and the expected value calculated for them on Wikipedia (well, they just assumed that the bankroll was US GDP and didn't look at a quantity theory of money solution specifically, but same diff).