Suppose Bob is a baker who has made some bread. He can give the bread to Alice, or bin it.
By the ROSE value, Alice should pay $0.01 to Bob for the bread.
How is an honest baker supposed to make a profit like that?
But suppose, before the bread is baked, Bob phones Alice.
“Well the ingredients cost me $1” he says, “how much do you want the bread?”
If Alice knows pre baking that she will definitely want bread, she would commit to paying $1.01 for it, if she valued the bread at at least that much. If Alice has a 50% chance of wanting bread, she could pay $1.01 with certainty, or equivalently pay $2.02 in the cases where she did want the bread. The latter makes sense if Alice only pays in cash and will only drive into town if she does want the bread.
If Alice has some chance of really wanting bread, and some chance of only slightly wanting bread, it’s even more complicated. The average bill across all worlds is $1.01, but each alternate version of Alice wants to pay less than that.
Suppose Bob is a baker who has made some bread. He can give the bread to Alice, or bin it.
By the ROSE value, Alice should pay $0.01 to Bob for the bread.
How is an honest baker supposed to make a profit like that?
But suppose, before the bread is baked, Bob phones Alice.
“Well the ingredients cost me $1” he says, “how much do you want the bread?”
If Alice knows pre baking that she will definitely want bread, she would commit to paying $1.01 for it, if she valued the bread at at least that much. If Alice has a 50% chance of wanting bread, she could pay $1.01 with certainty, or equivalently pay $2.02 in the cases where she did want the bread. The latter makes sense if Alice only pays in cash and will only drive into town if she does want the bread.
If Alice has some chance of really wanting bread, and some chance of only slightly wanting bread, it’s even more complicated. The average bill across all worlds is $1.01, but each alternate version of Alice wants to pay less than that.