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simianwordstoday at 5:27 PM1 replyview on HN

Isn't this the standard case of paying a premium for risk? An assured $500 dollars is worth more than 50% chance of 1200 dollars.


Replies

SpicyLemonZesttoday at 5:41 PM

It's the opposite, the author is saying is that you have to consider the dynamics of how you're getting the money. In his view, an opportunity to work 5 days for an assured $500 may be worth less than the opportunity to work 5 days for a 50% chance of even $900, even though $500 > $900/2. If you expect that 50% chance to be resolved by the end of day 1, you can just quit the second job, and if there's a third job that will pay you just $200 for the remaining four days (half the job 1 rate) then the EV increases to $550.