Hacker Newsnew | past | comments | ask | show | jobs | submitlogin

Here are some risks I'd like you to maybe prepare for:

A: 10% chance you lose 100$. Preparing costs 5$

B: 10% chance you lose 100$. Preparing costs 15$

C: 10% chance you lose 200$. Preparing costs 15$

D: 10% chance you lose 200$. Preparing costs 30$

E: 10% chance you win 100$. Ticket costs 20$

F: 10% chance you win 100$. Ticket costs 5$

You prepare for A & C. You buy tickets for F

Think of it like choosing when to fold in poker



It's useful to think that way, until you add more options:

G: 5% chance one of your parents die, preparation costs $X

H: 3% chance you die, preparation costs $Y.

What at what values of $X and $Y do you prepare?


Refusing to answer the question doesn't mean you won't have to make that decision. Better to've considered these questions ahead of time. People run into this when they haven't decided how much they're willing to pay before putting their pets down

The 5%/X 3%/Y question is also hard to answer since one also has to consider how much is it mitigating, if I survive with chronic pain or something then that loses value. Assuming full mitigation:

I'd be willing to pay ~16000$ to skip a 1/30 chance of death (valuing ~480000$ to live ~50 years, or 9600/year being-alive tax)

For my parents I'd be willing to pay ~9000$ to skip a 1/20 chance of one of their's death. (valuing ~180000$ for them to live ~30 years, or 6000/year being-alive tax)




Guidelines | FAQ | Lists | API | Security | Legal | Apply to YC | Contact

Search: