[Verdasco]

another what if moments. Anyone here risk takers?? Since the off topic is getting boring as of late, lets discuss and argue which choice is better. I personally would take the million :ilied:

stole this idea from misc too

[MWR34]

I would agree to split the 25 million with the other 50/50'er.

12.5 Million is better :)




Edit: Stupid fucking 4am posts. why do I enter these damn things.

If the OP worded it 100% for 1 million, or 50% chance for $25 million it would make more 4 AM sense!

[Verdasco]

I would agree to split the 25 million with the other 50/50'er.

12.5 Million is better :)

you do know that 50/50 applies to everyone right... :suspicious: it's like two people rolling two seperate dice with a 1/6 chance....

:facepalm:

[Iceman-19]

I'd take the for sure mil.

[Jackygor]

Would you bet one million dollars for a 50 50 chance of winning 25 million dollars?

[ilovebacon]

That would be a big gamble

[Jayboogz]

Anyone who doesn't pick the one mill is just retarded. Unless u have a killer paying job why wud u take the 5050 chance?

[Hurricane]

Would you bet one million dollars for a 50 50 chance of winning 25 million dollars?

If I didn't lift a single finger to earn the million...yep.

Anyone who doesn't pick the one mill is just retarded. Unless u have a killer paying job why wud u take the 5050 chance?

If you think its impossible to make a million dollars in your life, then you are probably incapable of recognizing the benefits of having a million in cash handed to you anyhow.

Probably blow through it in under a year, and end up with debts so big you lose whatever worldly possessions you had before you started anyhow.

25 million and 1 million, are only similar to people who have nothing.

I'd roll the dice. I am happy where I am now, but 25 million would significantly change the foreseeable future.

[blum2001]

I'd take the 1 million.

Then use that 1 million and grow it into 25 million. Entrepreneur side of me would kick in with a million in hand.

[freakshow]

mil for sure..

[i-VTEC]

25 Million!!! Get Rich or Die Tryin :ilied:

[FerrariEnzo]

I would agree to split the 25 million with the other 50/50'er.

12.5 Million is better :)

the 50-50 is NOT a split but 50% chance of winning the 25mil..


Logically, it should be the 1mil...
is this about gambling or like a draw type??
if its about going to the casino, then i can do some pretty stupid things with money at the casino, getting into the heat of the moment...
if its like a draw type then the 1mil is a no brainer...

[Stealthy]

I'll take the one million then spend about 5g's on scratch cards. derp

[PJ]

I'd take the million as well. That's too easy of a choice

A closer risk tester might be..
Would you take $5,000 or 50% of getting $1 million

[MG1]

50/50

Easy come, easy go............

[elwell]

50/50 go big or go home

[fobulaus]

25M scenario: Expected winnings = 12.5MM
1M scenario: Expected winnings = 1MM

Hmm..

[Bahhbeehhaaaa]

Anyone who doesn't pick the one mill is just retarded. Unless u have a killer paying job why wud u take the 5050 chance?

Who doesn't pick the one mill is just retarded...? Please... for the yourself and for our community.. get some education...

Option A:

100% for 1 Million

For every 1 % = 10 thousand


Option B:

50% for 25 million

50%+50% = 100%
25million / 2 = 12.5 million

for every 1% = 50 thousand


side note - I would assume that for those who commented lives in Canada/developed nations = high living standard. If a person that lives in Africa gets a chance to pick, he/she should not take any risk and walk away with that 1 million.


One last thing... one million dollars is not much as of today.

[ShadowBun]

like what above said

1 million isn't as much as used to be. I would take the risk.

[GGnoRE]

25 million baby

[gdoh]

id take the for sure 1 mil and build on it

[blum2001]

Who doesn't pick the one mill is just retarded...? Please... for the yourself and for our community.. get some education...

Option A:

100% for 1 Million

For every 1 % = 10 thousand


Option B:

50% for 25 million

50%+50% = 100%
25million / 2 = 12.5 million

for every 1% = 50 thousand


side note - I would assume that for those who commented lives in Canada/developed nations = high living standard. If a person that lives in Africa gets a chance to pick, he/she should not take any risk and walk away with that 1 million.


One last thing... one million dollars is not much as of today.

:facepalm:

50/50 does not mean split 50/50! There is no 'Risk' in SPLITTING it 50/50.

To put it in easier terms, it's flipping a coin.
Coins have two sides.
You either pick heads or tails.
50% heads, 50% tails.

Heads is 25 million
Tails is $0

You have 50/50 chance on getting both.
not 12.5 million vs 1 million

Maybe the OP should edit his original post to state 50/50 doesn't mean SPLIT the 25 mill but rather 50% chance of 25 mill cause some people just aren't understanding it.

[Bahhbeehhaaaa]

:facepalm::facepalm::facepalm:

I KNOW THERE IS NO SPLITTING!!!!!!!!!!!!!

I was trying to prove that if someone is willing to risk 50 percent chance to gain 25 million, is definitely worth a shot!


50% = 25 million.. which means 100% = 12.5 million! all i did was flip the numbers around!

[MindBomber]

Ha... I could barely buy a bare lot in Kits for $1 million.

I'd go for the $25.

[RiceIntegraRS]

Id take the million just because its the sure thing. But i like how someone said ud be retarded not to take the mil and its the logical choice to take the mil.

Where in this world can u get a 50% chance to win 25 to 1 on there money?

[Shorn]

if this actually happened to you in real life. if you chose the 25m and LOST, you would spend the rest of your life regretting it and wondering why you didn't go with the 1m. if you went with the 1m you could instead spend the time to invest and build that money to 25m instead of regretting.

if you took the 25m right now most of us would probably spend/lose it all. if you used the 1m and had the motivation to start a business and invest and LEARN to make money instead of having 25m thrown at you, you would definitely be a more successful person and STAY rich instead of being just temporarily rich.

and to people saying 1m is not a lot: well either you're already affluent or you just don't understand the value of money. you're telling me there's nothing you can do with 1m? really? who said anything about staying in vancouver and buying properties? 1 million liquid cash is no trivial amount. there are plenty of opportunities to make more money with 1m if you're smart about it and don't go buying fancy cars right off the bat.

[bballguy]

if this actually happened to you in real life. if you chose the 25m and LOST, you would spend the rest of your life regretting it and wondering why you didn't go with the 1m.

No, I wouldn't....1 mill aint shiettt....

[fobulaus]

You guys make it sound easy to turn 1M into 25MM :lol

Oh you know.. just a 2500% return..

[Shorn]

No, I wouldn't....1 mill aint shiettt....

yeah..? do you have 1m in equity? i mean you yourself personally. we're not even talking about straight hard cash now, just equity.

You guys make it sound easy to turn 1M into 25MM :lol

Oh you know.. just a 2500% return..

no, probably most people won't, but i'm betting whatever you can make from 1M is radically more than mostly everyone posting is making.

[Psykopathik]

cant retire on a million. roll the dice :)

[InvisibleSoul]

There is definitely more VALUE in taking the 50/50 risk for the $25 million, but this comes down to more than just numbers and logic.

If we lower the values down to the equivalent values:

1) 100% chance for $1
or
2) 50% chance at $25

You'd have to be dumb to not take option #2 each and every time.

This changes when the numbers get to what is stated originally, because $1M is not a trivial number like $1 is. Everyone here should be able to lose $1 without feeling an impact financially. But most people, or nobody, here can lose $1M without it being a huge life-crippling event.

It actually isn't even about picking one or the other... you can look at it as "are you willing to bet $1M for a 50/50 chance at $25M?"

If there was ever a situation like this in the real world, I would take the 50/50 chance at $25M, but I would hedge my bets.

I don't personally have $1M to risk, so I would take on investors.

Offer a 50/50 chance for the investor to get 10x return on their investment.

Surely most people would be willing to part with $1 for a 50/50 chance at $10. Split the $1M into 1 million shares, and people can buy however many shares they are comfortable with.

If some high roller wants to buy all 1 million shares, that's fine. They assume the entire risk.

If we win, I keep the $1M he paid to me, he gets $10M return on his $1M investment, and I get $15M on zero risk.

If we lose, I keep the $1M he paid to me, and he loses $1M.

I get $1M no matter what, plus a 50/50 chance at an additional $15M.

Win.

[KingDeeCee]

Wtf, no risk for 50/50?! Obviously 25 mil then.

[jaemc]

50/50 it is. Gotta try for the $25 mill

[InvisibleSoul]

Wtf, no risk for 50/50?! Obviously 25 mil then.
There actually is a risk. You're risking $1M on the 50/50 chance for $25M.

[fobulaus]

There is definitely more VALUE in taking the 50/50 risk for the $25 million, but this comes down to more than just numbers and logic.

If we lower the values down to the equivalent values:

1) 100% chance for $1
or
2) 50% chance at $25

You'd have to be dumb to not take option #2 each and every time.

This changes when the numbers get to what is stated originally, because $1M is not a trivial number like $1 is. Everyone here should be able to lose $1 without feeling an impact financially. But most people, or nobody, here can lose $1M without it being a huge life-crippling event.

It actually isn't even about picking one or the other... you can look at it as "are you willing to bet $1M for a 50/50 chance at $25M?"

If there was ever a situation like this in the real world, I would take the 50/50 chance at $25M, but I would hedge my bets.

I don't personally have $1M to risk, so I would take on investors.

Offer a 50/50 chance for the investor to get 10x return on their investment.

Surely most people would be willing to part with $1 for a 50/50 chance at $10. Split the $1M into 1 million shares, and people can buy however many shares they are comfortable with.

If some high roller wants to buy all 1 million shares, that's fine. They assume the entire risk.

If we win, I keep the $1M he paid to me, he gets $10M return on his $1M investment, and I get $15M on zero risk.

If we lose, I keep the $1M he paid to me, and he loses $1M.

I get $1M no matter what, plus a 50/50 chance at an additional $15M.

Win.


I understand rationale between both choices but it all comes down to the value of the money to the individual.. It doesn't come down to just logic..

How about if you magnified the numbers... 1 billion vs. 25 billion?
I would of normally chose the 25M if it was 1M/25M, but now I will choose 1 billion... Why? Because I'm satisfied with 1 billion.. I don't think it is worth the risk...

[freakshow]

I think Shorn said it best.
to people saying 1m is not a lot: well either you're already affluent or you just don't understand the value of money.

[InvisibleSoul]

I understand rationale between both choices but it all comes down to the value of the money to the individual.. It doesn't come down to just logic..

How about if you magnified the numbers... 1 billion vs. 25 billion?
I would of normally chose the 25M if it was 1M/25M, but now I will choose 1 billion... Why? Because I'm satisfied with 1 billion.. I don't think it is worth the risk...
I agree with that. If I could, I would apply the same proposed system for the $1B vs $25B, as in get investors to make up the $1B.

But if it was just a straight up choice, I might agree with you and take the $1B guaranteed, as that is more than enough to live affluently for the rest of my life.

Can't say the same for $1M though. That's barely enough to buy a house nowadays. Huge difference with $25M.

[FerrariEnzo]

with 1 mil, you can leave it in the bank and pretty much live off the interested and be set... prolly not the best way to invest... but you will be sure that you will always have 1mil if you really needed the money...
starting a business, you need to be VERY careful.. with how the economy is nowadays... choosing the wrong one and you would loose it..

real estate investment would prolly be top of my list if i really wanted to go into some type of business..

[i-VTEC]

I understand rationale between both choices but it all comes down to the value of the money to the individual.. It doesn't come down to just logic..

How about if you magnified the numbers... 1 billion vs. 25 billion?
I would of normally chose the 25M if it was 1M/25M, but now I will choose 1 billion... Why? Because I'm satisfied with 1 billion.. I don't think it is worth the risk...

+1

Everyone going to have different selection. Its up to see if you are satisfy with a Million or 25 Million. To some, 1 Million is more than they cant even make in 1 or 2 life time. However there are those, 1 Million isn't enough, so they take the risk 25 Million or Nothing and a coin flip chances is a lot higher than lottery.

There is no right or wrong answer. A lot of of situation could change your answer, let's say you are in serious debt, 1M could deal with that problem right away. If you are debt free, and making a lot of money, obvious choice would be selecting 25 M either you win becomes richer or loss but doesn't affect your living.

[ree666]

economics says it depends on how much you value wealth and if your are risk neutral/adverse.

But the pot odds are amazinggggggg for the 25m cash!

[fobulaus]

with 1 mil, you can leave it in the bank and pretty much live off the interested and be set....

This probably won't work... Prime rate is like 3% right now... You would be lucky to have a savings account paying more than 2%..

[XplicitLuder]

i think a better question would have been

1 = take the 1mil

or

2 = take a 50/50 chance at 25mil and if you lost, you also lose everything you have

that way its more of a risk.. and now you REALLY have to think about it.

[ws6ta]

LOL @ idiots gambling 1 million to win 25 million while making 10 bucks an hour


i'd take the million.

[Shorn]

LOL @ idiots gambling 1 million to win 25 million while making 10 bucks an hour


i'd take the million.

i'd listen to the rich guy :thumbs:

[i-VTEC]

all in all, it all comes down to what financial status you are now.

Most lower class + some middle class would choose 1 M

some Middle class + high class family would go for 25 M

[Ulic Qel-Droma]

take the 1 million. anyone that knows anything about money management would take the 1 million.

50% probability is too shitty.

and for people that say you can't do much with 1 million... wrong. THEY don't know how to use money as a tool.

[rsx]

I'm inclined to go for the $1m due to my tendency to be risk averse, but goddamn 50% chance to get $25m is damned tempting.

[RS_Pat]

Would take a certain 1 million, but I would not stick around to see what would happen if I picked the 50/50 so I don't get regretful thoughts...

1 million would mean not having to worry about my mortagage but keep me driven and honest enough to keep working.

Plus I risk death if I take the 50/50 and lose; the wife will put me 6 feet under!

[pastarocket]

I would definitely go for the $1 million. It's a sure thing in comparison with the 50/50 chance for the multi-million jackpot.

[fobulaus]

take the 1 million. anyone that knows anything about money management would take the 1 million.

50% probability is too shitty.

and for people that say you can't do much with 1 million... wrong. THEY don't know how to use money as a tool.

Anybody who knows anything about investing would tell you that 1MM upfront for a 50% (instant) chance of making 25MM (or lose everything) is a mind blasting opportunity....

What is the success rate of a tech start-up? 5%? 10%?

[murmur]

for people like me that don't want to take risk:

take 1 million
open a savings bank account that offers 1.2% annual rate
annual interest = $12,000
monthly interest = $1,000

combined with full-time job, or part-time job and studying. it would be nice.

(of course, there are banks that offer 1.4% savings account, such as canadian western. there are also better ways to enjoy the one million too, such as stocks/gic/bonds etc).

[Ulic Qel-Droma]

Anybody who knows anything about investing would tell you that 1MM upfront for a 50% (instant) chance of making 25MM (or lose everything) is a mind blasting opportunity....

What is the success rate of a tech start-up? 5%? 10%?

yeah but you're forgetting the part that 1 million would be (for most people), more money than you've ever had, and basically ALL your money. EVERY SINGLE PENNY.

it's not like you have 100 million in the bank.
sure if i had 100 million in the bank i'd give up 1 million for a 50/50 chance at 25 million.

but you have NOTHING in the bank. you're not a millionaire.

yeah it's a grand opportunity, if 1 million is chump change to you. Otherwise if you lose, you're left with nothing.

[InvisibleSoul]

1) Take 50/50 chance for $25M
2) Sell 50/50 chance for $25M to someone rich for $5M
3) ???
4) Profit!

[Mr.HappySilp]

I have prety bad luck so I would just take the $1m. Sure $1M is not a lot of money but I don't have to risk of not having it. Besdie I am happy with any free money.

Beside I am not a greedy person $1m I can get a decent apartment a decent car and that's all i really need. I will still work where I am.

[MindBomber]

1 million is enough to make life more comfortable, but not make my dreams come true. It's worth the gamble.

[i-VTEC]

1) Take 50/50 chance for $25M
2) Sell 50/50 chance for $25M to someone rich for $5M
3) ???
4) Profit!

:buttrock: pro

1 million is enough to make life more comfortable, but not make my dreams come true. It's worth the gamble.

Whats your dream? :suspicious:

Owning a collection of expensive cars?

:fullofwin:

[bballguy]

If I have an annual salary of $1mill , I see no reason to NOT take the gamble of 50/50 for $25-mill; it's as simple as that....It really depends on how much money you are already making....If I win 25-mill, I can retire 25 years early....If I lose, big deal, I'll work an extra year to make up that $1mill I just lost....

[MindBomber]

Whats your dream? :suspicious:

Owning a collection of expensive car?

:fullofwin:

No, I don't find material possessions very fulfilling. If I were to win $25 million, I would probably buy a Jaguar XKE and would feign after an Aston Martin DB3 but that's all. The money would go entirely towards charity work, which $1 million would only be enough get things started but not maintain relatively indefinitely.

[Ronin]

Some of you people must be horrible gamblers...it seems like no one understands how a coin flip works...

I'd do the $25m 50/50. $1m is a realistically attainable amount while $25m borders on what most of us will never, ever get to without extraordinary circumstances. I'd take that coin flip.

[Ulic Qel-Droma]

how about flip this question around.

a dude comes up to you, and puts a gun to your head.

he tells you, give up the 1 million bux in your hand now, and he'll let you go.

or flip a coin, if you win, he lets you go.
if you lose, you go to the bank and give him 25million (all your money).

which do you choose?

see how many of you change your answer.

mathematically, rationally, logically, the question is exactly the same.

[bing]

I think most people working for someone will probably make plus/minus 2 million pre-tax in their life time (on a scale of 35 years working life @ 40-60k/yr). In this scenario you are basically guaranteed half your salary tax free. Of course with one less worry, you could spend the time thinking of how to turn that 1 into 25, because that's entirely possible.

[i-VTEC]

Some of you people must be horrible gamblers...it seems like no one understands how a coin flip works...

I'd do the $25m 50/50. $1m is a realistically attainable amount while $25m borders on what most of us will never, ever get to without extraordinary circumstances. I'd take that coin flip.

True, but you would probably regretted if you lost to the coin flip? Wouldn't you? unless you are making crazy money.

If a person can already live a good life with or without the 1M or 25M, 25M would be chosen. Both 1M and 25M can change a person's life, in terms of how big of change, it differ, but whether just up to the person if he/she happy with one or the other.

Normally people would take 1M and run, but if you want more, gotta risk it, just like the game show, deal or no deal

[bing]

^think of all the jerry cans you could buy for 1 million, you'd be in heaven.

[Ronin]

how about flip this question around.

a dude comes up to you, and puts a gun to your head.

he tells you, give up the 1 million bux in your hand now, and he'll let you go.

or flip a coin, if you win, he lets you go.
if you lose, you go to the bank and give him 25million (all your money).

which do you choose?

see how many of you change your answer.

mathematically, rationally, logically, the question is exactly the same.

Well, no, that doesn't really work because the condition of the person is different.

If I had $25m in the bank and some guy wanted to rob me for $1m, that's a no brainer because I still have $24m. No one in the right mind would rather take a chance where they could lose $25m rather than $1m.

But the other way around if you gave me $1m and said you could win $25m or NOTHING and the chance is 50/50, that seems like a good bet because I had 0 to begin with.

[HonestTea]

I'd take the 1mil easily without any remorse or thought :)

[Ulic Qel-Droma]

Well, no, that doesn't really work because the condition of the person is different.

If I had $25m in the bank and some guy wanted to rob me for $1m, that's a no brainer because I still have $24m. No one in the right mind would rather take a chance where they could lose $25m rather than $1m.

But the other way around if you gave me $1m and said you could win $25m or NOTHING and the chance is 50/50, that seems like a good bet because I had 0 to begin with.

according to some people on this thread, it's not.

mathematically it is exactly the same.

[i-VTEC]

according to some people on this thread, it's not.

mathematically it is exactly the same.

but in reality is not.

usually when you can gain something, you always want more, but if you are going to lose something, you hope to be small

edit

and when you can gain to a point, that taking the risk is not needed then you just stop.

Those who choose 1M, for them is already worthwhile as regret you'll have to life with it for the rest of your life. Or you can be happy by making a safe choice with extra 1M in your bank account ontop of what you have already

[TRDood]

This would be a fun comparison, you must choose one:

Option A:
Marry a decent looking wife who is medicore in bed.

Option B:
50/50 chance between:
A hot wife who is amazing in bed, know her ways around the kitchen, and take care of the kids.
Or
A fat ugly wife who steals your money, do drugs, and doesn't love you.

option A would be the 1 million risk free and option B would be the $25 mil 50/50 :troll:

[i-VTEC]

Option B would be incorrect because its suppose to be whether you have the hot wife or you don't

Unless the question states if you win the coin flip you gain 25M if you lose the coin flip you lose 25M

[fobulaus]

according to some people on this thread, it's not.

mathematically it is exactly the same.

I'm with d87c, your example really doesn't make sense.

You're comparing between gaining 1MM or a 50/50 chance of gaining 25MM, versus losing 1MM or a 50/50 chance of losing 25MM.

Mathematically and logically, if you like, you choose the scenario which gives you the greatest expected return... Assume risk neutrality...

Case 1. Gain 1MM vs 25MM
Scenario 1: Expected Value = (1MM)*(1) = 1MM
Scenario 2: Expected Value = (0)*(0.5)+(25MM)*(0.5) = 12.5MM

Pick scenario 2 because it has the highest expected return.

Case 2. Lose 1MM vs 25MM
Scenario 1: Expected Value = -1MM
Scenario 2: Expected Value = -12.5MM

Pick scenario 1 because -1MM>-12.5MM.

In fact, you're supporting the argument of choosing Scenario 2 in the first case..

[ParadiseLost]

Option B would be incorrect because its suppose to be whether you have the hot wife or you don't

Unless the question states if you win the coin flip you gain 25M if you lose the coin flip you lose 25M

not necessarily... the remorse and regret of not taking the $1 million IN ADDITION to losing the 50/50 toss is equivalent to you being stuck with an ugly-ass wife

[i-VTEC]

I would say, if changing the question to

coin flip to lose 1M vs 100% loss 25M

and now that's similar to gaining 1M and coin flip 25M

then again, people would always choose to lose 1M haha so you can't really flip the question around

[TRDood]

I'm with d87c, your example really doesn't make sense.

You're comparing between gaining 1MM or a 50/50 chance of gaining 25MM, versus losing 1MM or a 50/50 chance of losing 25MM.

Mathematically and logically, if you like, you choose the scenario which gives you the greatest expected return... Assume risk neutrality...

Case 1. Gain 1MM vs 25MM
Scenario 1: Expected Value = (1MM)*(1) = 1MM
Scenario 2: Expected Value = (0)*(0.5)+(25MM)*(0.5) = 12.5MM

Pick scenario 2 because it has the highest expected return.

Case 2. Lose 1MM vs 25MM
Scenario 1: Expected Value = -1MM
Scenario 2: Expected Value = -12.5MM

Pick scenario 1 because -1MM>-12.5MM.

In fact, you're supporting the argument of choosing Scenario 2 in the first case..

You are assuming risk neutral behaviour.

It should be Utility[Expected Value] = Utility[Probably*Payout - Risk attitude]

How risk adverse you are is very hard to measure, but you can do it in a relative sense.

[i-VTEC]

not necessarily... the remorse and regret of not taking the $1 million IN ADDITION to losing the 50/50 toss is equivalent to you being stuck with an ugly-ass wife

The regret isn't because you are stuck with ugly wife, didn't win the clip flip to have the hot wife, like you mention that's the regret/remorse.

But the regret/remorse from the actual question is regret for not taking the Ok wife which is the 1M Dollar

You feel remorse that you gave up the chance on having the 1M not from you didn't win the coin flip

[Ulic Qel-Droma]

ok

how about this

what if you were the one holding the gun.

lol. now we're back to question 1.
except the victim is offering you this choice. and you must honor the choice.

now i think most people would pick the 1million right?

[fobulaus]

You are assuming risk neutral behaviour.

It should be Utility[Expected Value] = Utility[Probably*Payout - Risk attitude]

How risk adverse you are is very hard to measure, but you can do it in a relative sense.


I know.. I said I've assumed a risk neutral world...
Even with a reasonable utility function, the 50/50 option will be better..

[i-VTEC]

ok

how about this

what if you were the one holding the gun.

lol. now we're back to question 1.
except the victim is offering you this choice. and you must honor the choice.

now i think most people would pick the 1million right?

I really don't want to charge with kidnapping with demand of money, so can't answer you :fullofwin:

[fobulaus]

ok

how about this

what if you were the one holding the gun.

lol. now we're back to question 1.
except the victim is offering you this choice. and you must honor the choice.

now i think most people would pick the 1million right?

Personally if I was holding the gun I would choose the 25MM option...
In terms of value, the 25MM is a much better bet..

Try adjusting the winning probability upward to get the same expected return...

Let say you have 90% chance of winning 13.9MM, 10% chance you win nothing. The expected return is still 12.5MM...

Would you still go with the 1MM option?

[ParadiseLost]

The regret isn't because you are stuck with ugly wife, didn't win the clip flip to have the hot wife, like you mention that's the regret/remorse.

But the regret/remorse from the actual question is regret for not taking the Ok wife which is the 1M Dollar

You feel remorse that you gave up the chance on having the 1M not from you didn't win the coin flip

hmmm... after thinking about it again, i do agree with you but ONLY under the assumption that you had no control whatsoever in the 50/50 lottery.

For example, if you yourself had a flip a coin, and if it landed heads you win the $25 and if it landed tails you end up with $0, then the remorse afterwards will not only be not taking the $1 million, but also thinking "damn, if I had flipped that coin differently...". I think this feeling can be analogous to having to bear the terrible wife.

[i-VTEC]

hmmm... after thinking about it again, i do agree with you but ONLY under the assumption that you had no control whatsoever in the 50/50 lottery.

For example, if you yourself had a flip a coin, and if it landed heads you win the $25 and if it landed tails you end up with $0, then the remorse afterwards will not only be not taking the $1 million, but also thinking "damn, if I had flipped that coin differently...". I think this feeling can be analogous to having to bear the terrible wife.

to a small degree you are right. but we'll mostly if not all feel like we came out with empty handed.

unless the 1M isn't an option, you are given a coin flip win 25M

if you lose the coin flip you'll regret that damn I didn't win! and it was 50/50 how can I lose

however if there is another option 100% guarantee lesser amount like 1M, of course you'll feel, damn, why didn't I just walk away with guarantee money

*edit*
this is just like gambling, you already win X amount 1. you can choose to walk away or 2. you can risk 1M for the chance of winning the 25M grand prize. If you lost, you'll blame yourself I should have walked away.

[InvisibleSoul]

How the hell did a gun enter the picture? :gun:

[ParadiseLost]

Personally if I was holding the gun I would choose the 25MM option...
In terms of value, the 25MM is a much better bet..

Try adjusting the winning probability upward to get the same expected return...

Let say you have 90% chance of winning 13.9MM, 10% chance you win nothing. The expected return is still 12.5MM...

Would you still go with the 1MM option?

I don't think it's adequate to analyze this situation based on the "expected return" logic. For example, what if you changed the question to:

guaranteed $150 million vs 20% chance of winning $1 billion. The expected return for the latter is greater than the former, but I don't think too many people would pick option number 2.

[TRDood]

I know.. I said I've assumed a risk neutral world...
Even with a reasonable utility function, the 50/50 option will be better..

http://www.fao.org/docrep/w7365e/w7365e28.gif

Not really, as you can see, this is a person who is risk-averse. Anything between 1 and 5 is no good. ($0 million and $25 million in the OP's case, taking the no-gamble is strictly better off than taking gamble.)

http://upload.wikimedia.org/wikipedia/commons/thumb/e/e3/Riskpremium2.png/275px-Riskpremium2.png

In a risk neutral scenario, the utility curve is now flat, making the person indifferent between having 0, 1, or 25 million.


if I still remember my economic theory correctly :ilied:

[TheKingdom2000]

Holy Fcuk.
The comprehension level of some people is amazing.
But, I guess a community wouldn't be a community without the idiots.

[fobulaus]

There are hundreds of practical utility functions with different calibrated parameters...

By "better", i meant if this "deal" was to be sold in the market, majority of the people will value this "deal" for more than 1MM (i.e. 50% chance to win 25MM, 50% to win 0).

[InvisibleSoul]

I don't think it's adequate to analyze this situation based on the "expected return" logic. For example, what if you changed the question to:

guaranteed $150 million vs 20% chance of winning $1 billion. The expected return for the latter is greater than the former, but I don't think too many people would pick option number 2.
Yes, it is certainly more than just expected value.

If it's $1 and 50% chance of $25, I would obviously choose $25.

I wouldn't think twice about losing out on a loonie in my pocket, but I'd be happy to have $25 lining it.

If it's $1B and 50% chance of $25B, I would probably be content to settle for $1B.

$1B is already a ludicrous amount of money, and I can have everything I could ever dream of with that. I don't think my life would be any different if I had $1B or $25B, so I'd take the guaranteed $1B.

But if it's $1M and 50% chance of $25M, it's in the range where it could go either way.

$1M won't significantly change my way of life. It's like getting a house for free. I would still need to work for the rest of my life. However, $25M is definitely enough to change my forever. I can choose to never work another day in my life.

So in a way, for me personally, it would be "would you risk working an extra 10-15 years to make up the $1M you could have had for a 50% chance to live comfortably and never have to work again for the rest of your life"? Tough call.

[TRDood]

There are hundreds of practical utility functions with different calibrated parameters...

By "better", i meant if this "deal" was to be sold in the market, majority of the people will value this "deal" for more than 1MM (i.e. 50% chance to win 25MM, 50% to win 0).

True, I am just illustrating a very simple person who is risk averse vs. risk neutral.

Would you agree that risk neutral person would have a linear utility function? Would you also agree that risk averse person would have a concave utility function?

If yes, then the above would be one example that the $0/$25 option can't be strictly better than $1 option.

[fobulaus]

Oh yes I agree... A risk neutral person would be indifferent in regards to losing 100 vs. gaining 100.... therefore, the utility curve is linear..

I'm not saying you're wrong that it's possible that someone wouldn't risk 1MM for 25MM... You can always find a person who has zero risk appetite and won't even risk a penny for $100..

My point is just that, personally, I would go for the 50/50 option because it's a much better bet.. and so would a lot of people..

[i-VTEC]

Naturally it is never wrong to choose the guarantee way. It is never wrong if you choose the risky way too "only if you win", but when you lose, all that becomes negative.

So essentially, are you the type of the person, who can handle that regret/losing situation? If you can't deal with falling down, go to the safer path. But if you don't care about losing 25M not because you can make 25M in other way, but you can make a decent life and doesn't value money that much, know that live isn't always so lucky.

But if you going to become a businessmen, risk is a necessity. They will definitely choose the 25M

[i-VTEC]

Now if the question becomes

100% 1Million vs 50% 25Million vs 25% 50Million

Now, will we all go for the 50M? or the 1M ummm...

[fobulaus]

Can I go for 75% 12.5MM? :lol

[fobulaus]

Now if the question becomes

100% 1Million vs 50% 25Million vs 25% 50Million

Now, will we all go for the 50M? or the 1M ummm...

Actually, I would go for the 25MM twice to diversify my risk lol

[i-VTEC]

Actually, I would go for the 25MM twice to diversify my risk lol

haha I prefer that too

imagine you said heads to win 25M

both flipped tail

you'll be like FML :devil:

[fobulaus]

If you can keep doing it then it's pretty hard to lose lol

[bloodmack]

get the 1 million spend it all on lotto tickets.

[i-VTEC]

get the 1 million spend it all on lotto tickets.

:failed:

that would be 1/14 chances,

50% still better

[Ronin]

ok

how about this

what if you were the one holding the gun.

lol. now we're back to question 1.
except the victim is offering you this choice. and you must honor the choice.

now i think most people would pick the 1million right?

That's only because you're committing a fucking crime by robbing the guy and getting $1m with the better chance to get away is a better idea than a 50/50 shot at $25m.

No cops? 50/50, please.

It's because $1m, while a lot, isn't a LOT. $25m a lot. If you asked me whether I'd take $25m or a 50/50 shot at $100m, I'd take the $25m.

[bloodmack]

:failed:

that would be 1/14 chances,

50% still better

spend it on more then 1 game..

[Greenstoner]

i think ill take the 1 mill

ive never seen 1 mill in my account before lol

[Jayboogz]

If you think its impossible to make a million dollars in your life, then you are probably incapable of recognizing the benefits of having a million in cash handed to you anyhow.

Probably blow through it in under a year, and end up with debts so big you lose whatever worldly possessions you had before you started anyhow.

25 million and 1 million, are only similar to people who have nothing.

I'd roll the dice. I am happy where I am now, but 25 million would significantly change the foreseeable future.

Lol well I'd rather take the guarenteed million rather than the 50 50 chance at 25 mill. Who said I think its impossible to make a million. Greed kills mang I'd rather take the safe route.

[i-VTEC]

spend it on more then 1 game..

:failed::failed:

you don`t buy lottery game, you buy lottery tickets

since now you said, don`t use all of 1M to buy tickets only some then you have even less chance of winning.

all in all, its a dumb move to even think about investing money on buying lottery tickets to hope for chances of winning than then taking 50% chance of having 25M

:fullofwin:

[November]

Reading through page 1 had me like :fulloffuck:

Some of you guys need to re-do elementary school math.

[Nightwalker]

1 million would change my life entirely.

I wouldn't have to think hard about taking it.

[Ronin]

Friend brought up a good point on Twitter. For those of you that play poker, a 50% chance if you bet $1m to win $25m is a good bet. E.g. if the pot is $24m and you have a guaranteed 50% chance to win and it's $1m to call, that's a call pretty much any poker player would make.

[sundance1911]

Mathmatically you should go for 50/50 $25 mil..the expected value is $12.5Mil, much higher than $1Mil.

[tonyvu]

50% chance is a big gamble..

i'd go for the 1mill for sure

[goo3]

Friend brought up a good point on Twitter. For those of you that play poker, a 50% chance if you bet $1m to win $25m is a good bet. E.g. if the pot is $24m and you have a guaranteed 50% chance to win and it's $1m to call, that's a call pretty much any poker player would make.

The big difference in poker is you're playing many hands. Over time, you are making the smart bet.

But when you're playing the hand once, you're expected value is either 0 or 25 because 12.5 is not an option that exists.

The better question is what can you do with $1M. I think most ppl can retire in a few years with that money if they learn financial management or give it to a good money manager, but a lot won't think that way. They'll be thinking about buying a house, then car, then vacation, and they'll be left with 200K, so that's why they'll be going for the 25M.

[top_dyl]

for people like me that don't want to take risk:

take 1 million
open a savings bank account that offers 1.2% annual rate
annual interest = $12,000
monthly interest = $1,000

combined with full-time job, or part-time job and studying. it would be nice.

(of course, there are banks that offer 1.4% savings account, such as canadian western. there are also better ways to enjoy the one million too, such as stocks/gic/bonds etc).

most millionaires don't put money in a savings account, do they?

[Vege]

I would just take the guaranteed 1 million. Most things aren't guaranteed in life and if you're financially smart, you will make that 1 million grow exponentially.