Expected utility is not the same thing as expected dollars. As AgentStonecutter explained to you on Reddit last month, the standard assumption of diminishing marginal utility of money is entirely sufficient to account for preferring the guaranteed $250,000; no need to patch standard decision theory. (The von Neumann–Morgenstern theorem doesn’t depend on decisions being repeated; if you want to escape your decisions being describable as the maximization of some utility function, you have to reject one of the axioms, even if your decision is the only decision in the universe.)
the standard assumption of diminishing marginal utility of money is entirely sufficient
Not really. See this post. Still, the answer to that could be, and probably is, that people’s behavior in these matters is in fact unreasonable, and they should change it. I agree that the basic problem in the post here is that expected utility is equated with expected dollars. In utility theory a 10% chance of 10 times the utility is completely equal to 100% chance of the base utility. This is “by definition”, and if you prefer the 100% chance, you are saying that the other choice has less than 10 times the value.
Expected utility is not the same thing as expected dollars. As AgentStonecutter explained to you on Reddit last month, the standard assumption of diminishing marginal utility of money is entirely sufficient to account for preferring the guaranteed $250,000; no need to patch standard decision theory. (The von Neumann–Morgenstern theorem doesn’t depend on decisions being repeated; if you want to escape your decisions being describable as the maximization of some utility function, you have to reject one of the axioms, even if your decision is the only decision in the universe.)
Not really. See this post. Still, the answer to that could be, and probably is, that people’s behavior in these matters is in fact unreasonable, and they should change it. I agree that the basic problem in the post here is that expected utility is equated with expected dollars. In utility theory a 10% chance of 10 times the utility is completely equal to 100% chance of the base utility. This is “by definition”, and if you prefer the 100% chance, you are saying that the other choice has less than 10 times the value.