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DanielLC comments on Zeckhauser's roulette - Less Wrong Discussion

11 Post author: cousin_it 19 January 2012 07:22PM

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Comment author: DanielLC 19 January 2012 11:52:07PM 2 points [-]

A really bad example, since they didn't tell you how much your life is worth to you.

It only changes what you'd pay proportionately, so it wouldn't make a difference.

The real problem is that they didn't tell you how much you're capable of paying. Let's assume you can pay an infinite amount. Perhaps they torture you for a period of time.

So, where does the author go wrong?

provided that you don't have heirs and all your remaining money magically disappears when you die.

Your money is only valuable if you survive. Think of it as them reducing your winnings. It doesn't matter if you don't win. In that case, you should be willing to have them reduce it by $333 in either case.

because they mix finite costs ($1000) in this case with infinite ones ("dead anyway", i.e. infinite loss)

If your utility function works like this, you can just abandon the finite part. It's effectively impossible for it to come up, and it's not really worth thinking about.

Also, you seemed to imply that it was a finite (though high) cost earlier.

The only time actually estimating cost comes into play is when the risk change is small enough to be close to the noise level.

Why would noise level matter?

Comment author: shminux 20 January 2012 12:24:40AM 0 points [-]

A really bad example, since they didn't tell you how much your life is worth to you.

It only changes what you'd pay proportionately, so it wouldn't make a difference.

No, because, as you say:

The real problem is that they didn't tell you how much you're capable of paying.

I implied the same ("pay ALL I HAVE (and try to borrow some)"), if maybe not as succinctly.

Your money is only valuable if you survive. Think of it as them reducing your winnings. It doesn't matter if you don't win. In that case, you should be willing to have them reduce it by $333 in either case.

all your remaining money magically disappears when you die.

Right, I ignored this last condition, which breaks the assumption of "your life is worth $1000" if you have more than that in your bank account. However, in that case there is no way to limit your bet, and the problem becomes meaningless:

If your utility function works like this, you can just abandon the finite part. It's effectively impossible for it to come up, and it's not really worth thinking about.

It's not mine, it's theirs (you lose everything you own, no matter how much). Which supports my point of a badly stated problem.

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