See also: Diminishing marginal utility of wealth cannot explain risk aversion. Which I found in the comment here: http://lesswrong.com/lw/15f/misleading_the_witness/11ad but I think I read in another thread on lesswrong which I can’t find at the moment
As for me, one of the main reasons I wouldn’t take a bet winning $110 or losing $100 is that I would take the existence of someone willing to offer such a bet as evidence that there’s something about the coin to be flipped that they know and I don’t; if such a bet was implemented in a way that’s very hard for either partner to game (e.g. getting one random bit from random.org with both of us looking at the computer) I’d likely take it, but I don’t anticipate being offered such a bet in the foreseeable future.
I think some of the refused bets on the right-hand column of the table on Page 3 of that paper are not as absurd as Rabin thinks—Eliezer (IIRC) pointed out that there are quite a few people who would choose a 100% chance of receiving $500 to a 10% chance of receiving $1 million. (I’m not sure whether I’d accept some of those bets myself.)
This is not to say that human preferences can always be described by a utility function (see the Allais paradox), but I don’t think Rabin’s is sufficient evidence that they don’t.
As for me, one of the main reasons I wouldn’t take a bet winning $110 or losing $100 is that I would take the existence of someone willing to offer such a bet as evidence that there’s something about the coin to be flipped that they know and I don’t
See also: Diminishing marginal utility of wealth cannot explain risk aversion. Which I found in the comment here: http://lesswrong.com/lw/15f/misleading_the_witness/11ad but I think I read in another thread on lesswrong which I can’t find at the moment
As for me, one of the main reasons I wouldn’t take a bet winning $110 or losing $100 is that I would take the existence of someone willing to offer such a bet as evidence that there’s something about the coin to be flipped that they know and I don’t; if such a bet was implemented in a way that’s very hard for either partner to game (e.g. getting one random bit from random.org with both of us looking at the computer) I’d likely take it, but I don’t anticipate being offered such a bet in the foreseeable future.
I think some of the refused bets on the right-hand column of the table on Page 3 of that paper are not as absurd as Rabin thinks—Eliezer (IIRC) pointed out that there are quite a few people who would choose a 100% chance of receiving $500 to a 10% chance of receiving $1 million. (I’m not sure whether I’d accept some of those bets myself.)
This is not to say that human preferences can always be described by a utility function (see the Allais paradox), but I don’t think Rabin’s is sufficient evidence that they don’t.
This seems to follow the no-trade theorem for zero-sum games.