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#1
11-04-2007, 05:57 PM
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Would you put your life on the line?
Walking back, mildly drunk, a friend and I got into a discussion about a hypothetical scenario, where both of us had very different views. It's not really relevant who thought what, but one of us said a definite yes to the scenario and the other said no.
Here's the scenario: There's a guy pointing a gun at your head. He has a suitcase with $10m in it. He offers you to pick a number from 1 to 50. You then have to write it down. He then has one attempt at guessing that number. If he guesses right, he pulls the trigger. If not, he hands you a suitcase with $10m and you walk away unscathed. You do not have to pick a number. You can leave immediately instead. Do you gamble with your life? If yes, at what point would your answer become a no (i.e. pick a number from 1-40, or 1-25, or 1-10. If no, at what point would you take the gamble? (1-100, 1-1,000, etc) 
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#2
11-04-2007, 06:14 PM
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Re: Would you put your life on the line?
wow dude this is like so deep and stuff
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#3
11-04-2007, 06:24 PM
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Re: Would you put your life on the line?
You're both idiots because I'm wearing a bulletproof helmet and always get the moniez!
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#4
11-04-2007, 06:29 PM
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Re: Would you put your life on the line?
So, 49 times you win 10M, and 1 time you lose life.
0 = 49(10M) + 1(-X) X = $490,000,000. If you value your life at more than $490M, it's a -EV gamble. Personally, I thought for a while if I value my life at more than 490M$. Furthermore I think the varience in this game is too high for me to be comfortable, even if I value my life at less than that, and I walk away. Same situation, with 5000 #s, and 100K in suitcase, is less varience but still not good enough for me IMO. So I guess I value my life higher than that. If you make the #s 10x (i.e. make required value life to breakeven around $5B) I might reconsider).
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#5
11-04-2007, 10:12 PM
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Re: Would you put your life on the line?
[ QUOTE ]
So, 49 times you win 10M, and 1 time you lose life. 0 = 49(10M) + 1(-X) X = $490,000,000 [/ QUOTE ] No. $10m*(49/50) = $9.8m
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#6
11-04-2007, 10:18 PM
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Re: Would you put your life on the line?
I'd gamble.
Gimme da loot! Gimme da loot!
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#7
11-04-2007, 10:27 PM
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Re: Would you put your life on the line?
[ QUOTE ]
[ QUOTE ] So, 49 times you win 10M, and 1 time you lose life. 0 = 49(10M) + 1(-X) X = $490,000,000 [/ QUOTE ] No. $10m*(49/50) = $9.8m [/ QUOTE ] Every post I read in this thread that didn't correct that made me cry. But maybe it was some kind of retarded level.
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#8
11-04-2007, 10:32 PM
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Re: Would you put your life on the line?
I think that's the correct way to think about it. if your life is worth 9.8 million, you obv take this gamble. Your life has to be worth 490 million not to take it.
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#9
11-04-2007, 11:16 PM
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Re: Would you put your life on the line?
[ QUOTE ]
[ QUOTE ] [ QUOTE ] So, 49 times you win 10M, and 1 time you lose life. 0 = 49(10M) + 1(-X) X = $490,000,000 [/ QUOTE ] No. $10m*(49/50) = $9.8m [/ QUOTE ] Every post I read in this thread that didn't correct that made me cry. But maybe it was some kind of retarded level. [/ QUOTE ] I didn't correct it for natural selection reasons. I figured people that thought his math was correct would be more likely to pick the number and die. Way to make baby Darwin cry.
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#10
11-04-2007, 11:27 PM
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Re: Would you put your life on the line?
[ QUOTE ]
[ QUOTE ] [ QUOTE ] So, 49 times you win 10M, and 1 time you lose life. 0 = 49(10M) + 1(-X) X = $490,000,000 [/ QUOTE ] No. $10m*(49/50) = $9.8m [/ QUOTE ] Every post I read in this thread that didn't correct that made me cry. But maybe it was some kind of retarded level. [/ QUOTE ] lol. the correction is wrong. the original is correct if this is the valuation approach. $10m*(49/50) = $9.8m is the expected value of the proposition if you value your life at $0.
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