to many single points of failure = a crapshoot when trying to be rational about something
Actually, it’s pretty simple. Take each point of failure and rate its probability of actually happening. Then multiply all those chances. Say you stack three 99% chances of failure. That’s a one in a million chance. If your life (in terms of willingness to pay) is $5M, it is rational to pay $5.
...assuming independence. A die has a 50% chance of rolling an odd number in each roll and a 50% chance of rolling an even number in each roll, but the odds of rolling both simultaneously in each roll is 0% by definition. Or, going the other way, a 50% chance of even and ~16.7% chance of a six—but a 16.7% chance of an even six.
Actually, it’s pretty simple. Take each point of failure and rate its probability of actually happening. Then multiply all those chances. Say you stack three 99% chances of failure. That’s a one in a million chance. If your life (in terms of willingness to pay) is $5M, it is rational to pay $5.
...assuming independence. A die has a 50% chance of rolling an odd number in each roll and a 50% chance of rolling an even number in each roll, but the odds of rolling both simultaneously in each roll is 0% by definition. Or, going the other way, a 50% chance of even and ~16.7% chance of a six—but a 16.7% chance of an even six.