You are right in the sense that playing at the casino doesn’t give your friend an extra four dollars but since utility is relative it depends on your perspective. Allow me to explain
This demonstrates your view. C is the money lost or gained by playing at the casino.
Pay Parking outcome = −4$, Casino outcome = C
And this demonstrates your friends view
Pay Parking outcome = 0 , Casino outcome = C+4 (It’s the same as your view but +4 has been added to both sides)
If you apply a modifier (in this case +4) to all choices then the difference between them stays the same and a perfect utility maximizer will still make the same choice.
Humans are not perfect utility maximizers and so the modifier you apply to outcomes can have a effect on mood. For example a scenario where you have lost 50$ in order to keep $100. A possible view is that you
lost $50 (treating what you had before as 0 and setting utilities relative to that).
made $50. (treating the -$100 as 0 and setting utilities relative to that)
had no benefit (treating the best possible outcome as 0 and setting utilities relative to that)
Each option makes no difference to computer algortithm because it just cares about relative weights. A human however is going to be a lot happier if they view it as a gain instead of a loss.
You are right in the sense that playing at the casino doesn’t give your friend an extra four dollars but since utility is relative it depends on your perspective. Allow me to explain
This demonstrates your view. C is the money lost or gained by playing at the casino.
Pay Parking outcome = −4$, Casino outcome = C
And this demonstrates your friends view
Pay Parking outcome = 0 , Casino outcome = C+4 (It’s the same as your view but +4 has been added to both sides)
If you apply a modifier (in this case +4) to all choices then the difference between them stays the same and a perfect utility maximizer will still make the same choice.
Humans are not perfect utility maximizers and so the modifier you apply to outcomes can have a effect on mood. For example a scenario where you have lost 50$ in order to keep $100. A possible view is that you
lost $50 (treating what you had before as 0 and setting utilities relative to that).
made $50. (treating the -$100 as 0 and setting utilities relative to that)
had no benefit (treating the best possible outcome as 0 and setting utilities relative to that)
Each option makes no difference to computer algortithm because it just cares about relative weights. A human however is going to be a lot happier if they view it as a gain instead of a loss.