Nice stories, and this is my YAPS (yet another post summary): Risk aversion is rational when the (fully recursed) downside is unbounded. When your downside is bounded (you can evaluate the expected utility of a risky decision with high accuracy (how high is high enough?)), the rational choice is the one with the highest expected utility.
If considered this way, I definitely agree. As others said, in real life the fully-factored downside is hard to evaluate, and it tends to increase out of proportion with the first-order risk. Of course, the same happens to the upside, but the inability to calculate the fully-factored expected utility is a very rational reason to avoid risks.
Nice stories, and this is my YAPS (yet another post summary): Risk aversion is rational when the (fully recursed) downside is unbounded. When your downside is bounded (you can evaluate the expected utility of a risky decision with high accuracy (how high is high enough?)), the rational choice is the one with the highest expected utility.
If considered this way, I definitely agree. As others said, in real life the fully-factored downside is hard to evaluate, and it tends to increase out of proportion with the first-order risk. Of course, the same happens to the upside, but the inability to calculate the fully-factored expected utility is a very rational reason to avoid risks.
Missing the point—Clippy’s downside wasn’t unbounded. It was just larger because of lack of information.
Please tell me what the bound was, then.
0, at 0 paperclips. It’s only 1 utilon worse than having 1 paperclip, which is in turn 1 utilon worse than having 4.