You just incorporate that straight into the utility function.
You have $100 to your name. Start with 100 utility.
Hey! Betcha $50 this coin comes up heads!
$150 and therefore 110 utility if you win.
$50 and therefore 60 utility if you lose.
So you don’t take the bet. It’s a fair bet dollar wise, but an unfair bet utility wise.
Current theme: default
Less Wrong (text)
Less Wrong (link)
You just incorporate that straight into the utility function.
You have $100 to your name. Start with 100 utility.
Hey! Betcha $50 this coin comes up heads!
$150 and therefore 110 utility if you win.
$50 and therefore 60 utility if you lose.
So you don’t take the bet. It’s a fair bet dollar wise, but an unfair bet utility wise.