Michael Tobis wrote:
> Let me being by acknowledging Heiko's points.
>
> In my opinion, it is in fact the uncertainty that partially saves us
> from a mathematically pathological calculation.
>
> Only partially, though. Back when sci.environment was functional
> Steinn Siegurdsson discussed this matter with regard to large asteroid
> impacts. It is reasonable to consider the cost of an impact sufficient
> to obliterate all animal life on earth as infinite. The risk of being
> imacted by an asteroid, though tiny, is not strictly speaking
> infinitesimal.
>
> Similarly, once the jackpot in a lottery exceeds the point where the
> expected payoff is larger than the expected cost, is it rational for
> me to sell or mortgage everything I can to buy lottery tickets?
>
> There is indeed something missing here. I don't claim to know how to
> handle this class of problem in detail. I'd welcome any substantive
> quantitative ideas.
Well the easy answer here is that utility is not generally linear in
money, so although the first $1 might bring a positive expected return,
the last will not.
> Getting back to grinding my axe, though...
I'm not going to debate what is morally or ethically justifiable, but if
you personally are prepared to live your life according to a zero
discount rate, can I borrow your house and savings for a little while?
I'll give you them back in 100 years (index-linked of course), I'll even
add the overly generous return of 20% for your trouble.
Thought not :-)
James
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