(I also stopped reading around ‘Would you buy the lottery ticket?’)
That could be explained in passing by adding something like:
’Suppose you like tacos and really like pizza. You go out for a snack one day, and you see them both being sold. Which do you buy?
The pizza.
Suppose you do this a lot, or one day, you eat a lot of pizza—maybe you got busy with work, and decided to grab pizza and keep working. And it was pretty good, but the next day, you’ve had a lot of pizza. So maybe the next day, instead of buying pizza, you buy tacos (or a salad, because you want to eat healthier, because you’ve had a lot of pizza).
Okay, seems reasonable. What does this have to do with expected value?
Well, normally the ‘value’ or ‘utility’ of the pizza would be high. But now it’s lower (or the value of the tacos is higher). This also isn’t an unusual situation with utility—you go out to buy something to eat because you’re hungry. When you’re not hungry, maybe you don’t value pizza as much. Sure you’ll be hungry later, but it’ll be cold by then. We could also say the marginal utility of the pizza is diminished after you’ve had a lot of pizza.
But in the moment, considering what you want, you can figure out whether you’d rather have pizza or tacos, even if you chose something different yesterday (like eating lots of pizza, instead of buying tacos).
Bob: But I don’t understand something: with the lottery ticket, the payoff is clear. It’s a million dollars. But how can you say what the payoff is for eating a good taco?
Alice: You just wave your hands and estimate.
I’d say it’s relative. If you’re really hungry, even the lentil tacos might start to look good. (Saying it this way is probably easier than mentioning opportunity costs.)
It is really, really harmful,
I think people who are afraid of heights will probably lose out on the dangers of (base jumping) even if they ‘neglect the value of the principles of expected value’.
There’s a chance for a story here, where someone who is excited about expected value talks with someone who initially doesn’t get it, then is just like ‘that’s just common sense. This isn’t useful unless you’re trying to figure out which lottery ticket you should buy and you know the odds and the payouts—which for some reason, seems hard to get. Maybe this is useful for like, your job working in the stock market or selling insurance—pricing things, or coming up with ways to pick which car you should buy, but isn’t something new in everyday use. There it’s covered by simple heuristics like ‘try new food occasionally, and more often if you don’t know what you like’ and ’try to get more info about things now and then, especially when it’s cheap (i.e. just by talking to people about it).″
That could be explained in passing by adding something like:
Yeah, but it still does go off in a different direction from the larger point of explaining what expected value is and why it is common sensical. I could see adding it though. It felt like a close call to me as I was writing this. I also considered touching on how this expected value stuff is supported by the academics.
Whether or not it’s actually “really, really harmful”
I see what you’re saying about how people do reasonably well in everyday life by using their heuristics. But my opinion is that “reasonably well” is a stretch, and the lack of expected value based thinking is in fact pretty harmful. Unfortunately, my thoughts on this are pretty jumbled and I’m not at the point of being able to explain why I believe this very well. Maybe I’ll figure it out and write up my thoughts in a future post.
(I also stopped reading around ‘Would you buy the lottery ticket?’)
Would you mind letting me know why? I promise I won’t take offense or anything, it’d just be useful feedback for me to improve as a writer.
Would you mind letting me know why? I promise I won’t take offense or anything, it’d just be useful feedback for me to improve as a writer.
I was a little busy at the time, but mostly because I’m familiar with (the concept of) expected value—so since I wasn’t learning something new, so I decided to move on. (If it was a more complicated concept I might not have, because I could use the refresher more, but EV(x) = p(benefit)*Benefit-p(cost)*Cost is a formula I’m not going to forget anytime soon.
But my opinion is that “reasonably well” is a stretch
Probably. I wonder if that’s a result of a tendency towards inaction, in general.
While I’m familiar with the idea, I haven’t used it a lot—mostly because the objects involved aren’t natively numbers. (Like, I didn’t buy lottery tickets before I knew. The general argument in favor of using expected value more (in a straightforward way) might be “You could buy more stuff, and treat that as buying a lottery ticket, with better odds.”)
I came back later and finished it.*
Bob: True. But what about Black Friday where all of those sites shut down?
That’s the kind of factor where I’d expect paper to be involved to actually make sure the total amount at stake isn’t too high. (I don’t do correlated probability (EV) calculations in my head, atm.)
*I just figured out a great argument for creating two accounts on this:
By making a comment, and then creating a response to that comment on a different account, it would be easy to set up a reminder to re-read, or finish reading, something. The only problem is the induced clutter, which is a general problem with trying to re-use comment features. (If used to comment on a non-public draft, then maybe that would only affect the shared parties, and function as a work around/fix.)
The really useful version of the feature (reading list reminders) would be adding a timing aspect to it, or being able to set up dependencies (i.e. read this then this). Just having it in one place could work, but the way UI is currently set up doesn’t use pages (like you can see 10 bookmarked posts (and only posts, and not comments or shortforms), but there isn’t the option to go through pages). I wonder if the GW viewer handles those differently or at all.
I was a little busy at the time, but mostly because I’m familiar with (the concept of) expected value—so since I wasn’t learning something new, so I decided to move on.
Gotcha, thank you.
I wonder if that’s a result of a tendency towards inaction, in general.
Hm, I don’t get that impression but I’m not sure. I’m gonna keep an eye out for this.
It’s misleading to prescribe maximizing expected large amounts of money: Your first $100k in the bank is a lot more important than your tenth.
This is why the currency of Sophia switched from gold to benthamite—instead of dealing with tricky nonlinearities, you just transact in coins made of pure utility.
Yeah I was going to address this but didn’t want to get too sidetracked with diminishing marginal utility.
(I also stopped reading around ‘Would you buy the lottery ticket?’)
That could be explained in passing by adding something like:
’Suppose you like tacos and really like pizza. You go out for a snack one day, and you see them both being sold. Which do you buy?
The pizza.
Suppose you do this a lot, or one day, you eat a lot of pizza—maybe you got busy with work, and decided to grab pizza and keep working. And it was pretty good, but the next day, you’ve had a lot of pizza. So maybe the next day, instead of buying pizza, you buy tacos (or a salad, because you want to eat healthier, because you’ve had a lot of pizza).
Okay, seems reasonable. What does this have to do with expected value?
Well, normally the ‘value’ or ‘utility’ of the pizza would be high. But now it’s lower (or the value of the tacos is higher). This also isn’t an unusual situation with utility—you go out to buy something to eat because you’re hungry. When you’re not hungry, maybe you don’t value pizza as much. Sure you’ll be hungry later, but it’ll be cold by then. We could also say the marginal utility of the pizza is diminished after you’ve had a lot of pizza.
But in the moment, considering what you want, you can figure out whether you’d rather have pizza or tacos, even if you chose something different yesterday (like eating lots of pizza, instead of buying tacos).
I’d say it’s relative. If you’re really hungry, even the lentil tacos might start to look good. (Saying it this way is probably easier than mentioning opportunity costs.)
I think people who are afraid of heights will probably lose out on the dangers of (base jumping) even if they ‘neglect the value of the principles of expected value’.
There’s a chance for a story here, where someone who is excited about expected value talks with someone who initially doesn’t get it, then is just like ‘that’s just common sense. This isn’t useful unless you’re trying to figure out which lottery ticket you should buy and you know the odds and the payouts—which for some reason, seems hard to get. Maybe this is useful for like, your job working in the stock market or selling insurance—pricing things, or coming up with ways to pick which car you should buy, but isn’t something new in everyday use. There it’s covered by simple heuristics like ‘try new food occasionally, and more often if you don’t know what you like’ and ’try to get more info about things now and then, especially when it’s cheap (i.e. just by talking to people about it).″
Yeah, but it still does go off in a different direction from the larger point of explaining what expected value is and why it is common sensical. I could see adding it though. It felt like a close call to me as I was writing this. I also considered touching on how this expected value stuff is supported by the academics.
I see what you’re saying about how people do reasonably well in everyday life by using their heuristics. But my opinion is that “reasonably well” is a stretch, and the lack of expected value based thinking is in fact pretty harmful. Unfortunately, my thoughts on this are pretty jumbled and I’m not at the point of being able to explain why I believe this very well. Maybe I’ll figure it out and write up my thoughts in a future post.
Would you mind letting me know why? I promise I won’t take offense or anything, it’d just be useful feedback for me to improve as a writer.
I was a little busy at the time, but mostly because I’m familiar with (the concept of) expected value—so since I wasn’t learning something new, so I decided to move on. (If it was a more complicated concept I might not have, because I could use the refresher more, but EV(x) = p(benefit)*Benefit-p(cost)*Cost is a formula I’m not going to forget anytime soon.
Probably. I wonder if that’s a result of a tendency towards inaction, in general.
While I’m familiar with the idea, I haven’t used it a lot—mostly because the objects involved aren’t natively numbers. (Like, I didn’t buy lottery tickets before I knew. The general argument in favor of using expected value more (in a straightforward way) might be “You could buy more stuff, and treat that as buying a lottery ticket, with better odds.”)
I came back later and finished it.*
That’s the kind of factor where I’d expect paper to be involved to actually make sure the total amount at stake isn’t too high. (I don’t do correlated probability (EV) calculations in my head, atm.)
*I just figured out a great argument for creating two accounts on this:
By making a comment, and then creating a response to that comment on a different account, it would be easy to set up a reminder to re-read, or finish reading, something. The only problem is the induced clutter, which is a general problem with trying to re-use comment features. (If used to comment on a non-public draft, then maybe that would only affect the shared parties, and function as a work around/fix.)
The really useful version of the feature (reading list reminders) would be adding a timing aspect to it, or being able to set up dependencies (i.e. read this then this). Just having it in one place could work, but the way UI is currently set up doesn’t use pages (like you can see 10 bookmarked posts (and only posts, and not comments or shortforms), but there isn’t the option to go through pages). I wonder if the GW viewer handles those differently or at all.
Gotcha, thank you.
Hm, I don’t get that impression but I’m not sure. I’m gonna keep an eye out for this.