I’ve just seen the Wikipedia article for the ‘overwhelming gain paradox’:
Harford illustrates the paradox by the comparison of three potential job offers:
In Job 1, you will be paid $100, and if you work hard you will be paid $200.
In Job 2, you will be paid $100, and if you work hard you will have a 1% chance of being paid $200.
In Job 3, you will be paid $100, and if you work hard you will have a 1% chance of being paid $1billion.
Most people will state that they will choose to work hard in jobs 1 and 3, but not job 2 [2]. In Job 1, working hard is obvious because there is a clear reward for doing so. In Job 2, it seems a bad choice because the likelihood of a reward is so low. But in Job 3, working hard becomes the preferable choice, because the potential gain is so overwhelming that any chance—no matter how small—of obtaining it is seen as worthwhile. This appears irrational and paradoxical, because jobs 2 and 3 are identical 99% of the time.
Why the hell would anyone consider that a paradox? ISTM that it is completely reasonable for an utility function to be such that the disutility of working harder would be exceeded both by the utility of extra $100 and by 0.01 times the utility of extra $999,999,900, but not by 0.01 times the utility of extra $100. (If anything, I would consider anything else to be paradoxical, for people for whom the disutility of working at all is exceeded by the utility of getting $100 in the first place.)
I’ve just seen the Wikipedia article for the ‘overwhelming gain paradox’:
Why the hell would anyone consider that a paradox? ISTM that it is completely reasonable for an utility function to be such that the disutility of working harder would be exceeded both by the utility of extra $100 and by 0.01 times the utility of extra $999,999,900, but not by 0.01 times the utility of extra $100. (If anything, I would consider anything else to be paradoxical, for people for whom the disutility of working at all is exceeded by the utility of getting $100 in the first place.)