3 point shot for 1 billion or 1 million if you don't shoot

[Dro]

Put another way.

Would you rather have a chance at a 3 point shot for $1,000.00, or $1.00 guaranteed?

In this situation, it is unlikely that you are risk adverse, therefore you would behave rationally...go after the $1,000.00.

The poor kid from the poorest 3rd world country would still be risk adverse, and take the $1.00.

I'm pretty sure that poor kid would still take the risk for $1,000. Now if it were a chance at $100,000 or guaranteed $10,000. They would probably take the $10,000...hell so would I. I would probably take $1,000 in that scenario too

[tpols]

Whether you'd take the chance at 1 bil or sure 1 million all depends on your current worth. If you're in the negative or close to 0.. you'd be retarded to turn down a 1000000% return for a 10000000000%

[FLDFSU]

Trying for 1 billion is not more rational for me. Maybe it has higher expected return but not higher expected utility for me.

For me $1 million is a comfortable few decades if not life if I invest right. $1 billion dollars is that + a lot of toys.

To put it another way, that first million would probably mean as much to me as the next 999 million. That wouldn't be the case for people who are already wealthy but I think most people would agree

Correct. Neither is it for me. Neither is it for the vast majority of Americans.

But from a pure logic perspective: going for the Billion is indeed more logical.

Just like foregoing $1 for a chance at $1,000 is more rational.

[FLDFSU]

The key is understanding the risk aversion at a certain monetary level. That's when it becomes rational in RL to walk away with the money.

I agree. The real question is at what point does one become risk adverse.

For me I would take $50,000.00 even for a chance at 1 billion in this example.

I have student loans that I would rather wipe out...

[tpols]

Put another way.

Would you rather have a chance at a 3 point shot for $1,000.00, or $1.00 guaranteed?

In this situation, it is unlikely that you are risk adverse, therefore you would behave rationally...go after the $1,000.00.

The poor kid from the poorest 3rd world country would still be risk adverse, and take the $1.00.

No.. he wouldnt.. that's a few days wages to him.. vs months or even a year for making the shot. If someone offered me a guaranteed 2000 or take a shot for 200,000 you can bet your ass I'd be taking that shot.

[RoundMoundOfReb]

rational would be taking the option with the highest expected rate of return.

If you have a 1% chance of hitting the shot, your expected return on taking the shot is (.01)($1B) or $10,000,000

So shooting the $1B shot is the mathematically rational option if the opportunity cost is under $10 million.

Not really, though. there are diminishing returns as you increase the money. there is a huge difference between making 20,000 a year and 640,000 a year but there is no real difference to your life if you're making 2 billion or 64 billion a year.

there's not necessarily a linear relationship where your life will improve in a manner dirrectly proportional to the amount of money you have...

if you plotted quality of life vs amount of money it would look something like this:



overall: I'd take the 10 mil but i'd shoot if it were 1 mil.

[tpols]

Not really, though. there are diminishing returns as you increase the money. there is a huge difference between making 20,000 a year and 640,000 a year but there is no real difference to your life if you're making 2 billion or 64 billion a year.

there's not necessarily a linear relationship where your life will improve in a manner dirrectly proportional to the amount of money you have...

if you plotted quality of life vs amount of money it would look something like this:



overall: I'd take the 10 mil but i'd shoot if it were 1 mil.

Exactly.. only way you take the shot is if you're like Joyner and have your daddies behind you, future rents secured, already have all the clothes food and extracurriculars paid for..and you would trade an extra few luxuries for a chance to become another Donald sterling.

Otherwise.. for a normal person you'd have to be crazy to turn down the guaranteed

[FLDFSU]

No.. he wouldnt.. that's a few days wages to him.. vs months or even a year for making the shot. If someone offered me a guaranteed 2000 or take a shot for 200,000 you can bet your ass I'd be taking that shot.

We need to stick to multiples of 1,000. Not multiples of just 100.

Okay, using $100.00 vs. $100,000.00, the poor kid would take $100.00.

You, on the other hand, would go for $100,000 as losing $100.00 is not going to make or break you.

And I did not know you could post about something other than Lebron James...

[Joyner82reload]

Exactly.. only way you take the shot is if you're like Joyner and have your daddies behind you, future rents secured, already have all the clothes food and extracurriculars paid for..and you would trade an extra few luxuries for a chance to become another Donald sterling.

Otherwise.. for a normal person you'd have to be crazy to turn down the guaranteed

Yep, I'm a terrible person for being born into my family. I should be ashamed of myself despite the fact that I'm working my ass off to get into medical school. Jesus, this type of criticism is so played out and frankly down right unwarranted. I'm a piece of shit because my parents are helping supporting me until I finish my education.

[tpols]

Yep, I'm a terrible person for being born into my family. I should be ashamed of myself despite the fact that I'm working my ass off to get into medical school. Jesus, this type of criticism is so played out and frankly down right unwarranted. I'm a piece of shit because my parents are helping supporting me until I finish my education.

I never said you were a 'terrible person'. Just that you are operating from a different perspective than 99% of humans on this earth and thus your opinion is heavily biased and shortsighted

[Joyner82reload]

I never said you were a 'terrible person'. Just that you are operating from a different perspective than 99% of humans on this earth and thus your opinion is heavily biased and shortsighted

And yet you insult me with the daddies comment. I would hope you would help support your children someday if you have the means just as my father has.

[tpols]

And yet you insult me with the daddies comment. I would hope you would help support your children someday if you have the means just as my father has.

The fk? Would you prefer fathers? You didn't make that money.. it was pure luck. That is the fault of another.

Excuse me.. I'll refer to it as 'the persons who came before you and provided everything'.. that help?

[dreamwarrior]

If I had months to practice, for sure I'd take the shot. I shoot 3's better than I do FT's. Well actually no, more like 50% from 3 and 70% FT, but I feel more confident and less nervous taking a 3.

[bballnoob1192]

You're losing the guaranteed money by taking the shot.

What team are you buying if you make it, the Knicks?

money you don't have is not something u can lose.

[iamgine]

I'll take the 1 million.

In the 3pt contest, about 50% of the players missed their first shot. So even for great NBA Shooters, the chance of making this shot is only 50%. Granted, in the 3pt contest they have the added pressure of time but I think in this scenario they also have the added pressure of having to make it to offset that.

You are an anxious, just ok shooter in an unfamiliar noisy environment. I would think a decent shooter would make it about 10-15% of the time in this scenario. Therefore, unless I'm already making $7 million+ a year, I'd take the guaranteed money.