That old eccentric billionaire
I received ten total responses so far for my hypothetical situation involving the eccentric billionaire. To recap, a billionaire walks up to you and offers you a billion dollars to complete one task. The catch, you have a 90% chance of living and a 10% chance of dying. Do you accept? I said that I had two answers for this and I'm going to detail my answers before getting to everyone else's.
Answer 1.
Assuming that I was single. I would take it. I figure that I have a very good chance of accumulating millions of dollars in my lifetime, but this is a shot for the elusive one billion dollar mark. I would do it (assuming it wasn't anything illegal or unethical).
Answer 2.
Assuming I'm married (which I still am :P). No way. I want to see my kids grow up.
What have we learned? Marriage was good for me. No, seriously. I've seen other bloggers talk about this as well (Lamoneyguy). You find that special someone and it makes you more grounded. In my case, having a wife and kids have made me more grounded, responsible, and mature.
Now let's look at what others have to say about this:
Anon: "It would depend on my age or personal circumstances"
Jim: "I'm reminded of something Warren Buffett said: Why would you risk something that you have and need to get something you don't have and don't need?"
Moom: "I don't need a billion dollars. I don't think it is a good risk aversion question BTW because it's not comparing like with like and the outcomes are so extreme." [Freaking economists, always pointing those things out :P]
Hans: "Apart from your age and risk-aversion, it depends on your financial situation"
jj: "these are precisely the odds on climbing mount Everest...10% of those who try die" [There is your task from the billionaire, climb Mt. Everest]
LAMoneyGuy: "Wouldn't take it. The amount is really kind of arbitrary, as it will never suffice to account for the magnitude of risk. The risk in this case is simple, it's infinity. It's not 10% of death or any other such craziness. It's infinity."
Mike: "I'd take the task, provided that it didn't involve hurting or killing any member of my family or my friends"
her every cents counts: "Maybe it if was a 1 percent chance, but I'd likely still avoid taking the risk"
FrugalBabe: "I'm an athiest too, so I have no delusions of an afterlife. So that 10% chance of dying would just be too much of a risk for me" [Greetings fellow atheist]
Living Almost Large: "Depends is it fun? If it's fun and a once in a lifetime opportunity? Then heck ya! If it's something illegal and stupid then no"
9:18 AM
|
Labels:
personal finance,
risk aversion
|
This entry was posted on 9:18 AM
and is filed under
personal finance
,
risk aversion
.
You can follow any responses to this entry through
the RSS 2.0 feed.
You can leave a response,
or trackback from your own site.
3 comments:
Granted that the stakes are literally *everything* here, which sort of skews the answer, what would be a sound approach to making a decision here?
I think it would be that, if you take Richard Branson's word and believe the odds, you could evaluate whether you were 'better' at accomplishing any arbitrary task than at least 10% of the people in the world who attempt tasks.
I think the level of risk is important. I mean everytime we get in the car there's a chance we'll die, and it's not like the payoff is that great - maybe it's to get a soda. The problem is that we never think about decisions in these terms, but these are accurate terms for most everything in life.
So I'm one of the few who would do it? I guess I'm riskier than I think. I think DH would do it too, but it really depends on the situation. Once in a lifetime opportunity and is it fun? Or illegal and riskY?
Post a Comment