Potentially a way in which this heuristic makes sense in real world is if the utility of 0$ was negative. If I were an banana seller then if I sold nothing, when I got my next shipment of bananas I wouldn’t have enough space in my warehouse and I’d have to throw out some bananas. In this case, I have to take out an insurance policy against 0$ in all cases except certainty. This will hold even if insurance costs are proportional to probability of 0$ if there were fixed transaction costs to buying insurance.
Potentially a way in which this heuristic makes sense in real world is if the utility of 0$ was negative. If I were an banana seller then if I sold nothing, when I got my next shipment of bananas I wouldn’t have enough space in my warehouse and I’d have to throw out some bananas. In this case, I have to take out an insurance policy against 0$ in all cases except certainty. This will hold even if insurance costs are proportional to probability of 0$ if there were fixed transaction costs to buying insurance.