Help me settle this dispute (Simple EV problem)

[SumZero]

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Thanks again for the replies. The whole conversation between my friend and I arose because I read a thread on 2p2. The thread posed the question of if you had a +10% edge on a coin flip, what would be the max you would wager. I asked my friend the question and she said that she wouldn't wager anything. I told her that she's losing money with that policy, and the argument proceeded from there.

So as Punter says, the argument has been blurred in semantics but what my intention was, was to show my friend how she is 'losing out' (not necessarily 'losing money' per sé, because obviously no one is reaching into her pocket and taking her cash).

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Your friend is demonstrating behavior that makes them either:

1. an idiot

2. the world's most risk adverse person ever


I mean sure if your friend's net worth is $50,453.43 and immediately after the coin flip is done she is killed if she has less than $50,450.00 then she's right to refuse the coin flip. But other than that case (I.e., less likely than being correct to fold AA pre-flop) that 50% chance of $50,464.43 and 50% chance of $50,443.43 or 100% chance of $50,453.43 presents only one correct answer.

What's interesting is most people are somewhat idiotic like your friend and if you instead phrased it differently like you have two choices:

Choice 1: You win $20

Choice 2: 50% of the time you win $10 and 50% of the time you win $31

your friend would have probably done the correct decision.

People make all kinds of illogical decisions around risk and treat found money differently than their own money. And on the one hand it is sad and troubling. And on the other hand... profit.