Monday, July 2, 2012

The trouble with risk-averseness as bias

is that your last fifty thousand dollars are much, much more valuable than the next.  In fact, your second fifteen thousand dollars is a lot less valuable than your first fifteen thousand dollars.

Seems like this would be the obvious way it evolved. . . and also, I think it's pretty reasonable a lot of the time now.  Hmn.

1 comment:

  1. Well, your first 40k is probably more valuable than your next 60k, really. I mean, would you rather have a 50% chance of being broke or making 100k a year, or would you rather make 40k? The latter, and it's perfectly economically rational.

    So, you're dead right. I even had a professor who pointed out the exact same thing.