Suppose there was a Lottery where tickets cost 1 and you have a one-in-a-million chance of winning
500,000 (no other prizes). Would you buy any tickets? No?Now suppose there was another a Lottery where tickets still cost 1 but you have a one-in-a-million chance of winning 2million (no other prizes). Would you buy any tickets now? Yes?
Now suppose you buy 100 of tickets in each Lottery. You have the same chances of winning or losing in each. If you lose, you lose 100 in either. If you win, you receive much more than
100, so it was definitely worth playing!So why would anyone answer the two questions at the top differently? The two lotteries have the same downside (100, if you buy that many tickets), with the same chances (999,900-in-a-million). They have the same chances of an upside (100-in-a-million).
Thoughts?