Another risk adversity question. For all you hypothetical pokers, please assume that this is on the level and I have motives that are my own for offering it. Add in any supplemental details and reframe how you like to make you comfortable with accepting the deal is straight-up.
So, I’ve got a standard roulette table numbered 0-36, 37 slots, the wheel is completely fair. I’ll either give you 37 $30,000 chips or 36 $1 million chips. You place them each in a single number and spin. For the first it’s a formality, you’ll get $1,080,000 regardless, for the second you have a 97.2% of walking away with a cool $36 Million but a 2.8% of nothing.
My previous risk adversity question showed dopers to be, imo, very risk adverse. I’m curious what this will come up with.
I’d go for the 37 million. I can live with myself not winning a million bucks. That money makes life easier, but it’s all just retirement money for me. $37 mil is life changing money.
That’s an extremely difficult choice. 1.08 along with the money I already have would almost be enough to let me do whatever I want for the rest of my life assuming no bank-breaking illnesses and avoiding extreme frivolities. If it were 2 mill versus 70 mill I’d take the 2. As it stands i’d probably try for the 36.
I’d try for the $36 million. A little over $1 million would allow a few luxuries but mostly fatten my already adequate retirement savings; $36 million, handled with reasonable prudence, would be take-this-job-and-shove-it followed by a very comfortable lifestyle money.
I picked the sure thing, for the same reasoning as other posters picked the 97% chance, but with different parameters. For me, either amount of money would be equally life-changing, because with my lifestyle, a cool million is already enough to never need to work again (I still would anyway, because I enjoy my work, but it’d be a massive decrease in stress). If I’m getting the same effective value either way, then I’d like to maximize my odds of that value.
I voted for the sure thing. I HATE gambling. I am likely to have a heart attack while the ball is spinning, if I gamble.
Besides, I can invest $1m to pay out an annuity that, along with my husband’s pension, my smaller annuity I already have, and both our SS checks we’ll get at 65, will mean that by retirement age, we’ll be bringing in about $8,000/month. I can live on that, easy. Even before that, we’ll be doing quite well.
This is it for me too. I own a business, so would keep it going and probably do some expanding. A million would be plenty. And honestly, I don’t want a “life-changing” amount of money. I like my life, and most life changes that come with a massive infusion of cash usually aren’t good ones.
I’d go for the 1.08 million, because I guess I am really risk-averse in some ways, and because for me, a nice retirement would actually be life-changing.
After taxes, the $1M payout would be more like $600K.
Since the $600K would be a sure thing, and you would have to forego that sure thing in order to take a shot at the big prize, I can formulate an equivalent scenario:
If my net worth is $600K + $X (where $X is my actual current net worth), would I wager $600K for a 97% chance to win $36M?
I don’t think I would, unless X were quite a bit bigger than it actually is right now, i.e. big enough that losing $600K wouldn’t dramatically alter my future.
