Sweet possibility v.s. bitter certainty
"For instance, suppose you offer somebody a choice: They can flip a coin to win $200 for heads and nothing for tails, or they can skip the toss and collect $100 immediately. Most people, researchers have found, will take the sure thing. Now alter the game: They can flip a coin to lose $200 for heads and nothing for tails, or they can skip the toss and pay $100 immediately. Most people will take the gamble. To the imagined rational man, the two games are mirror images; the choice to gamble or not should be the same in both. But to a real, irrational man, who feels differently about loss than gain, the two games are very different. The outcomes are different, and sublimely irrational. "
― Benot B. Mandelbrot, The (Mis)Behavior of Markets
So tell me,
1) Would would you flip a coin for a possible gain of 200pips and risk of zero gain, or just accept the 100pips gain with no risk at all ?
2)Would you flip a coin for a possible loss of nothing and the risk of losing 200pips, or just accept the 100pips loss with no further risk ?
Please explain your answers.
"For instance, suppose you offer somebody a choice: They can flip a coin to win $200 for heads and nothing for tails, or they can skip the toss and collect $100 immediately. Most people, researchers have found, will take the sure thing. Now alter the game: They can flip a coin to lose $200 for heads and nothing for tails, or they can skip the toss and pay $100 immediately. Most people will take the gamble. To the imagined rational man, the two games are mirror images; the choice to gamble or not should be the same in both. But to a real, irrational man, who feels differently about loss than gain, the two games are very different. The outcomes are different, and sublimely irrational. "
― Benot B. Mandelbrot, The (Mis)Behavior of Markets
So tell me,
1) Would would you flip a coin for a possible gain of 200pips and risk of zero gain, or just accept the 100pips gain with no risk at all ?
2)Would you flip a coin for a possible loss of nothing and the risk of losing 200pips, or just accept the 100pips loss with no further risk ?
Please explain your answers.
The truth is hidden from you