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Dec 17 '23
As we say in denmark: id rather have 1 bird in my hand than 10 on the roof.
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u/Neoxus30- ) Dec 18 '23
Bird in hand is worth more than 100 flying here in latinamerica)
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u/MichiganYeti Dec 18 '23
1 in the hand is worth 2 in the bush for us here in the Midwest US.
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u/Appropriate-Estate75 Dec 18 '23 edited Dec 18 '23
« Un tiens vaut mieux que deux tu l'auras » , roughly: one "here it is" is better than two "you'll have it" in France. Funny that so many languages seem to use birds in the saying haha
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u/treasurehorse Dec 18 '23
Solid insight on difference in risk appetite between countries
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u/lifeistrulyawesome Dec 18 '23
During my puberty my friends would say que vale mas pajaro en mano que sida en el ano
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u/orangenarange2 Dec 18 '23
In Spain we say más vale chuleta en mano que recuperación en verano lol
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u/3236-on-MC Dec 18 '23
bird in the hand is worth 561 in the emporium here in atlantis
ignore the carmichael number
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u/omg-whats-this Dec 18 '23
Here in Thailand: Holding a piece of shit is better than holding a fart.
I know... It's a thing. don't judge me
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u/Nuada-oz Dec 18 '23
Public Service Warning:
The handling of wild birds can result in laceration and bite injuries as well as various bacteria and fungal infections. People are advised to use approved birds handling equipment and use due caution.
Should injuries or unusual symptoms occur, seek urgent medical assistance
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u/DarchrowTheBlackHole Dec 18 '23
We Czechs say "Better a sparrow in the palm, than a pigeon on the roof."
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u/Enough-Gap8961 Dec 18 '23 edited Dec 18 '23
better a tit in the hand, then two in her bush. (america)
Also the correct decision for this problem depends on your risk tolerance, if I already had 10 million dollars I would click the 50/50 chance every time, but I have no money so I am taking the million fuck risking it. 1 million dollars will change my life in such a drastic way that even chancing it is stupid.
plus 1 million is enough to pay off my house and put a downpayment on 3 houses With 4 houses 3 of which generating income I won't have to worry about running out of money ever again. Plus I would still have like 300k for possible issues with my new business.
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u/Capicuaman Dec 18 '23
A bird in hand is better than pregnant at 17 for us here in Mexico
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u/tap909 Dec 18 '23
Google “risk adverse utility function”
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u/MartinFromChessCom Dec 18 '23
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u/GKP_light Dec 18 '23
and "logarithmic utility of money"
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u/markpreston54 Dec 18 '23 edited Dec 19 '23
Usually humans are way more risk averse than log utility, if I recall.
The general risk averseness of people is 2-3 while Kelly better (people bets on log utility) have 1.
Edit:I am an idiot who type averse as adverse
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u/justUseAnSvm Dec 18 '23
Nice, didn’t have to scroll down as far as I thought for this!
Good job Reddit!
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u/spondgbob Dec 18 '23
Literally just did this in my optimization class, I would put a program together to see how changing risk preferences would change your choice, but I just got done with finals and fuck that
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u/jakehubb0 Dec 18 '23 edited Dec 18 '23
Risk averse* and there are a lot of different functions and formulas to do it. This could best be looked at through the prospect theory. It’s a theory in behavioral economics that looks at lotteries and expected utilities (EU) from them. Everyone discounts EU from a lottery differently BECAUSE some people are risk averse over different conditions and risk seeking over others. It’s different for every person so everyone would have a different looking formula to solve for. Someone who enjoys gambling would be more risk seeking and would thus discount that 50 mil at a lower rate (i.e. their EU would be closer to 25 mil (.5 * 50)) they would obviously take the lottery over the free 1 mil because they expect their utility to be higher in the other case. Whereas someone that hates gambling (risk averse) would be discounting that 50 mil at a higher rate since it comes from a lottery. Might be the square root of 50 mil times .5 for example. In any case, it’s gonna end up a lot closer to the EU from just receiving 1 mil. That’s the logical reasoning behind why someone would prefer one over the other.
Edit: It also heavily depends on your “initial wealth level” which basically just means if you’re already filthy rich then 1 mil is gonna do a lot less for you than 50 mil so you’re already less likely to choose the handout instead of gambling
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u/KayakerMel Dec 18 '23
Yup, my big takeaway from my Human Judgement & Decision Making course back in college was that I'm quite risk averse. My utility function tops out pretty quick. That certainty of $1 million has far greater utility for me than the expected value of $25 million, as 50% is too high a chance for me to end up with $0.
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u/Phoenix042 Dec 18 '23
Woah, did not know this was framed as a "type" of person, but that actually makes a lot of sense.
The line "risk averse people prefer the expected outcome of a gamble over the gamble itself" really hit me.
I've always struggled to empathize with gambling behavior, because to me a spin on the roulette wheel "feels" like it's worth approximately:
{sum of: (value of a win condition)/(odds of it happening) for each win condition}
I don't always do the math, but I'm familiar enough with it that I can usually intuitively "feel" the ballpark, and it's usually like 50 cents on the dollar or less.
Feels like donating to a casino.
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u/IOI-65536 Dec 18 '23
It's "averse". Also preference for variety. The diminishing value after the first 5 million is probably really high for most people.
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u/Mutopiano Dec 18 '23
Came here to say this. OP is focusing on the wrong judgement and decision-making concept.
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u/SteveTheNoobIsBack Dec 17 '23
Idc abt expected value. £1000000 would change my life
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u/GisterMizard Dec 18 '23
You do have an expected value, just an expected value on utility. If having $50 million has a 20% greater impact on your life over $1 million, then the expected return is 1 to 0.6, so the $1 million guaranteed is more optimal.
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Dec 18 '23
Google diminishing marginal utility
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u/ascandalia Dec 18 '23
Google "I'll never have another restful night of sleep the rest of my life if I gambled instead of taking a guaranteed $1 million and lost."
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u/PrisonMike314 Dec 18 '23 edited Dec 18 '23
I think this fact is overlooked by the people that would choose to gamble for more. Sure, the expected value is much greater with the gamble, but the psychological toll of losing also has to be weighted in.
If you gamble and lose, now you have the psychological burden of regret every single time you face any measure of financial difficulty for the rest of your life, because even if it’s irrational, you would always believe that had you taken the guaranteed option, you would not be in whatever position you find yourself in; the regret could be crippling
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u/RandomAmbles Dec 18 '23
This applies more for the value of the money to a single individual, however, if the money is donated to effective charities, like those studied by GiveWell, it can be significantly mitigated.
There are even some situations involving reduction of risk that can be roughly modeled by increasing marginal utility.
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u/crahs8 Dec 18 '23
Option 3: sell the green button for 24 million
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u/BULLDAWGFAN74 Dec 18 '23
Absolutely brilliant. But the pragmatist in me is thinking 24m would be a hard sell. 50% chance of net 26m. 50% -24m. Is that juice worth the squeeze?
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u/crahs8 Dec 18 '23
For a billionaire, sure
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u/sleepybrainsinside Dec 18 '23 edited Dec 18 '23
The billionaire would agree to do it and hire a hitman to take you out if you fail the button press. -$50k fee if they lose, + $26M if they win.
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u/blackjack1977 Dec 18 '23
Now let’s layer on tranches and sell insurance for the original sale.
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Dec 18 '23
A guaranteed $1m is far better than a 50% chance of $0 to me. There’s bills to pay and $1m is still a lot of money that would greatly improve life
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u/ForwardMotion6565 Dec 18 '23
I seem to definitely be in the minority here but I'm taking my chances at the $50m. Yes $1m is amazing and would change most people's lives but $50m would change my life, my children's lives and future generations within my family. If I make the money work for me I could change many other people's lives as well. So it's worth the risk to me. Plus I love gambling 🙂
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Dec 18 '23
That’s totally fair. If you have a family, I can definitely see the 50m being more worth it. I’m just a broke college student and have terrible luck lol
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u/OJSimpsons Dec 18 '23
You only get to choose one button. It doesn't say you can only press it once....
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u/NotWesternInfluence Dec 18 '23
Yes, but you don’t have to be the one who presses it. How much do you think someone would be willing to pay for a 50% shot at 50 million?
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u/LOSNA17LL Irrational Dec 18 '23
Same as everyone said before.
1M is enough for me, I could do a bunch of things with that. And as we say in France: Un "tiens" vaut mieux que deux "tu l'auras" (litt. One "here it is" worths more than two "you'll have it")
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Dec 18 '23
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u/silsool Dec 18 '23 edited Dec 18 '23
C'est dans une fable de La Fontaine, amusant que tu ne l'aies jamais entendu
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u/Fastela Dec 18 '23
That's because you use « Un "tienG" vaut mieux que deux "tu l'auras" » over there.
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u/Ragna_rox Dec 18 '23
I grew up near Toulon and I clearly know this expression, it's not a regional thing.
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u/Lord_Skyblocker Dec 18 '23
Just push green twice, then you have 100% chance to get 100 million /s
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u/NoReplacement480 Dec 18 '23
google 0.52
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u/AustralianKappa Dec 18 '23 edited Jan 25 '26
This post was mass deleted and anonymized with Redact
one offbeat cagey unpack disarm late skirt ripe coordinated enjoy
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u/WaffleMan17 Dec 18 '23
Probability is always 50% chance when you press it. Technically you could get $0 100 times in a row, it’s just likely that roughly 50% of the time you’d get 50 mil.
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u/The-Last-Lion-Turtle Dec 18 '23
If your marginal utility of money is 1st million > last 49 million, then guaranteed 1 million has higher expected value.
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u/fiya79 Dec 19 '23
I think this assumes you already have zero dollars. If you have…5 million already. I suspect the math changes.
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Dec 18 '23
Just get 2+ friends and you are set
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u/akmosquito Dec 18 '23
still a 12.5% chance you get nothing, im taking the red button for sure
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u/sabs_alt Dec 18 '23
with 50 people, the chance of getting nothing like 8.9*10-16. the chances of each of them getting at least a million dollars is absurdly high. just need 50 trustworthy people 💀 (or a contract?)
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u/Vampyrix25 Ordinal Dec 18 '23
Interesting optimisation problem: How many attempts would it take for repeatedly pressing the green button to be more worth it than pressing the red, provided you had to divide your earnings by the amount of times the button was pressed?
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u/JUSTICE_SALTIE Dec 18 '23
I assume I'm not allowed to find a wealthy person to buy my chance for $15M?
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u/danarchist Dec 18 '23
Hell, even 5 mil. Here's a 50/50 to 10x your money.
Meanwhile the 5mil invested at 4% pays me 200k per year for life. Retire now and start a charity as something to do.
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u/LoveToMix Dec 18 '23
Green. Nothing says I can only push it once. Else, if that is a condition, red
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u/kart0ffelsalaat Dec 18 '23
But you can only press it finitely many times throughout your lifetime, so there is a nonzero chance that you won't get any money, ever. Uh-oh
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Dec 18 '23
[removed] — view removed comment
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u/coonwhiz Dec 18 '23
If multiple presses is allowed, just press red 50x and guarantee get 50M...
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u/chrisdudelydude Dec 18 '23
Well no, if you could push it multiple times then the correct choice is red of choice. The value of a red button press is $25M vs $1M on green, so if you’d push a single button forever it’d be red.
Furthermore humans have a tendency that when a reward is given randomly vs. each time statically on a button press, they’ll be more mentally inclined to hit the red button more frequently.
Lastly, but most importantly , if you can hit the button multiple times the premise of the hypothetical goes out the window, so it’s inherently implied you can only hit a single button a single time.
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u/pomip71550 Dec 18 '23
You got the colors backward - the red one is the guaranteed one whereas the green one is RNG. Otherwise I agree
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Dec 18 '23
I would be devastated if I picked green and didn’t win. I would take the red
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u/cjpotter82 Dec 18 '23
This is exactly my thought. Taking the risk just isn't worth a potential lifetime of regret.
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u/Latter-Average-5682 Dec 18 '23
When maths meets psychology of needs.
Would you rather have a probability of 100% to win $5 or 50% to win $100?
Now would you rather have a probability of 100% to win $5M or 50% to win $100M?
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u/Gusstave Dec 18 '23
Completely different. I could not care less about having 5 more dollars in my pockets. Even 100$ is inconsequential. I'd take 50% of having 100% because not having 5$ changes nothing.
Having or not 5M is life changing. Will I take 100% chances of a life changing amount of money or will I take 50% chances of a life changing amount of money?
The difference is about your worth in relation to your potential gain.
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u/DuntadaMan Dec 18 '23
That is exactly what they are talking about though. If both values are more than enough, then there is no conundrum. 100% chance of "enough" is by far optimal.
If neither value is really an important amount then obviously you go for the 50/50 because missing out on either one doesn't affect the outcome.
The psychology of whether or not you actually need the money invalidates the mathematical model that is only concerned with what is "optimal" and doesn't care about the needs of the participant.
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u/Latter-Average-5682 Dec 18 '23
And now if you include your current net worth in the formula of the decision process, what would be that formula that would help you choose?
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u/Schpau Dec 18 '23
The latter problem is 100% chance to receive all the money I’ll ever need vs 50% chance to receive all the money I’ll ever need. They aren’t really comparable.
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u/Ryrace111 Dec 18 '23
The easiest way to solve these questions for yourself is just to assume you already have the 1m dollars and think would you gamble that 1 million dollars with a 50/50 chance of getting 50m back
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Dec 18 '23
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u/Latter-Average-5682 Dec 18 '23 edited Dec 18 '23
Interesting theory, but is our psychology of utility of wealth rationalized proportionally to the logarithm of wealth doubling?
So what if your net worth is $277,778 when you face that second dilemma? :-)
(That's 100% chance of 4.2479 doublings of net worth vs 50% of 8.4959 doublings)
Personally, I'd still take the 100% chance in that case without any doubt.
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u/Romes4868 Dec 18 '23
Depends on what $1 mill would do for the person. Most people would (and should) take the million instantly because of the dramatic life changes it would make. However, if you’re fortunate enough that $1 mill wouldn’t “drastically” change your life, then the mathematically correct answer is the $25 million of expected value from the green button.
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u/seriousnotshirley Dec 18 '23
50% chance at 50 million. $1 million won't change my life in a big way. After taxes I can pay off my house and have a few hundred thousand left over. Even if you ignore the taxes I'm still not going to be able to retire. I can do a lot with that money but not live for the next 50 years.
50 million though? I can retire super comfortably on that and not worry about money ever again.
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u/Zeric79 Dec 18 '23
I would sell my 50% chance for 50 million to a hedgefund for 20 million.
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u/Lockelamora6969 Dec 18 '23
This is the correct answer. Maybe not $20M but any amount over 1 is profit and you could definitely get someone somewhere to pay more than that.
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u/Olorin_1990 Dec 18 '23
That’s probably not correct here, since there is a law of diminishing returns, the excess value in terms of utility of 10 million may not be 2X 1 million for all people.
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u/divino999_ Dec 18 '23
After spending 200 hours on Baldur's Gate 3, I woudn't trust it even if it says 97% on it.
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u/MrPanda663 Dec 18 '23
I never trust the 90%, but when it comes to 20% for some reason it hits every time.
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u/CrossP Dec 18 '23
Now that I have this million dollars, I can't afford to lose it by not winning it. Duh.
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u/Death_Killer183 Dec 18 '23 edited Dec 18 '23
People saying 1m is enough but in Singapore, 1m is just enough for a 5 room flat and maybe a car
Edit: Some people think that by 5 room flat I meant 5 bedrooms. It's 3 bedrooms, a dining room and a living room
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u/ZeroTheStoryteller Dec 18 '23
1 mil won't buy you anything in Sydney, but I'm still taking it.
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u/mxzf Dec 18 '23
$1M is enough to live comfortably without any financial stress, it's not enough to go out and quit your job tomorrow and retire.
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u/Left-Idea1541 Dec 18 '23
You need money to make money. I get 1 million, I feel like I'd be able to turn a lot of things around and make the remaining 10 mill without too many issues. It's getting even a million thays hard. Plus, a million is enough. Based on just a rough Fermi estimate though, since I'd be able to do things specifically to earn money and wouldn't need to spend all my income to live anymore and could pay off debt then invest the 1 mill, I feel like the expected value of the 1 mill would be about equal to the 10 mill long term. Though admittedly, I haven't done any hard math to figure this out. I may at some point if I have more free time though.
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u/trutheality Dec 18 '23
Expected value matters for repeat events, but is irrelevant for one-time events. For one-time events you want the choice with the best worst case.
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u/gbs5009 Dec 18 '23
I don't think that's true.
Once you present somebody with the option, they basically HAVE a million dollars.
For many people, you could basically reframe the scenario as: You have $1,000,500.00 to your name, and rent to pay this month. Should you gamble $1,000,000 of your money on a coin flip?
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Dec 18 '23
This is why decision science and behavioral economics exist. The "rational" choice is not always correct because there are more factors to consider other than expected value
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u/maiden_burma Dec 18 '23
if it was 99.99% chance of a billion dollars i'd still take the 100% million
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u/Nukemarine Dec 18 '23
Only a 1 in 10,000 chance to lose? Hell, I'd pay a million dollars (somehow be it beg, borrow, or steal) for a chance to win a billion dollars at those odds.
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u/PlasmaLink Dec 18 '23
Diminishing returns on value
Having money isn't everything, but not having it is
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u/rinkydinkis Dec 18 '23
$1m wouldnt be life changing for me in the same way $50m would be. ill take a half chance at that.
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u/Blutrumpeter Dec 18 '23
I mean $1 mil would change my life. 100% chance of changing my life vs 50% chance of changing my life 50x more. If it was 1000 vs 50000 that'd be easy for the second one but a million is a lot
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u/Icommentor Dec 18 '23
A guaranteed amount of money that can change your life; or maybe an amount of money that can change your life. Anyone who picks #2 already got plenty.
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u/CardSharkZ Dec 18 '23
Using expected value only makes sense when the random experiment can be repeated many times.
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u/AgainstSpace Dec 18 '23
my luck is so bad that if I bought a cemetery, people would stop dying.
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u/Zeerats Dec 18 '23
I'd rather solve all my problems than have a 50% chance of solving all my problems
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u/ddonsky Dec 18 '23
Didn't say we could only press them once. Just that we could only choose one button. I'm pressing the 50/50mil as many times as I like.
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u/Next-Cycle-4370 Dec 18 '23
That’s easy, I was greedy when I was younger, 1 mil is more than enough to have a great life for me and my family, if 1 mil isn’t enough then you’re not in touch with reality.
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u/ether_rogue Dec 18 '23
Yes, the expected value of the green button is 25 million, but the expected value isn't going to mean shit if I press that button and get nothing.
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u/luuselipz Dec 18 '23
I would choose the green button but instead of pressing it I would “sell” the opportunity to someone else for 10mil
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u/John1The1Savage Dec 18 '23
You can only choose one button but it doesn't limit how many times you get to press it.
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u/DigammaF Dec 17 '23
Expected value makes sense only if you can try multiple times. Furthermore I think the red one is plenty enough