Would you rather have a 100% chance to win 100K USD, or a 50% at 10 million dollars?
Feeling lucky? What does your gut tell you? Let's have a look into human behavior.
Assume there's no tax, and you're making a median income of 50k a year.
In economics and decision theory, loss aversion refers to people's tendency to strongly prefer avoiding losses to acquiring gains. Studies suggest that losses are 2x as powerful, psychologically, as gains. Loss aversion implies that one who loses 100USD will lose more satisfaction than another person will gain satisfaction from a 100USD gain. There are many marketing techniques that take advantage of "trial periods and rebates" to tap into a buyer's tendency to value the "goods" more after the buyer incorporates it in the status quo.
What is your opinion on Loss Aversion? Are you crazy for taking the 50/50 shot?
I'm a gambling man and also likes to take risks in life - that's what makes it exciting, don't like something that is guaranteed - nothing should be taken as granted, live your life like it will end tomorrow - so I'm almost always on the 50/50 shot (the only time I would reconsider is if I could take that 100% thing and reinvest in something that is 50/50 :D ) .
A very fair point. I try not to take things for granted and I need to constantly keep myself in check.
Something I always think about when I get a little stressed out about investing. It's not like you can take all that money to the grave so who cares how much you win in the end?
With risk comes great reward.... or sometimes nothing. I don't have the stomach for loosing that much money myself.
I would take the 100% shot for sure. Putting that 100k into the right ventures could easily make more then 10 mill over time.
Always hustlin' ;)
You sound like quite the entrepreneur! I like all your posts btw.
Cant let the hustle hand get weak ya know :] I appreciate that. Im trying to add as much value as I can to steemit :] Ive seen you around quite abit as well I noticed you had upvote alot of my stuff.
You should check out our MinnowsUnite chatroom on Gli.ph(We have about 35 members and trying to grow rapidly) Theres a great mobile app with notifications too. It would be great having you.
https://gli.ph/g/mT205P/CbFybHevfa12pvgQqtZgt50coGG6ZTyxDzDyWSXQJ7s=
Wow how cool :O
Thanks so much for the invite!
I would take the $100,000 and never look back at "what if I won the 10mil"
Frankly my long term life plans only need about $100,000 before I exit mainstream capitalist society and stop needing currency entirely.
Imagine how many more people would play roulette if the reward was 100x instead of 2x. For that reason, I suspect most people (that already have enough money to live comfortably) would go for the 10 million.
Got to be the 50% for 10 million!!!! All day long!!
A 50% chance at $10M is worth $5M.... That's a lot more than $100k. You'd be INSANE to take the $100k.
Call me insane then because I would definitely take the $100k.
But that's because I fundamentally disagree with the premise that a 50% chance to recieve X is worth one-half of X.
Everybody would choose the 50% 10million. It has 5million expected value against 100k so it is 50x better deal.
Looks like we have a few different opinions. This ended up being quite a fun little experiment.
I would take the 50/50. The reason is I don't have anything to lose. Sure 100k is awesome but I like the risk.
I'm barely alive due to my financial situation, I'd take the 100 percent guarantee of security!!
100% chance of 100k....I could move to SE Asia and fucking retire!