Comments on: Fourth Floor Tails https://twentythirdfloor.co.za/2010/03/14/fourth-floor-tails/ Perspectives Tue, 30 Mar 2010 18:42:54 +0000 hourly 1 https://wordpress.org/?v=6.9.1 By: David Kirk https://twentythirdfloor.co.za/2010/03/14/fourth-floor-tails/comment-page-1/#comment-15501 Tue, 30 Mar 2010 18:42:54 +0000 http://twentythirdfloor.co.za/?p=497#comment-15501 In reply to Francois Botha.

And I attempted to show how playing the lotto can be rational, if your utility function supports it!

]]> By: Francois Botha https://twentythirdfloor.co.za/2010/03/14/fourth-floor-tails/comment-page-1/#comment-15500 Tue, 30 Mar 2010 13:28:00 +0000 http://twentythirdfloor.co.za/?p=497#comment-15500 Oh, I just realise that you pretty much said exactly what I said in your Nasty or Nice post.

]]> By: Francois Botha https://twentythirdfloor.co.za/2010/03/14/fourth-floor-tails/comment-page-1/#comment-15499 Tue, 30 Mar 2010 13:25:19 +0000 http://twentythirdfloor.co.za/?p=497#comment-15499 Well, that’s the whole principle of insurance: swapping a potential huge risk (which might or might not occur) for a much smaller cost, but at least you’re 100% certain of it. That cost of course being the policy premium.

And furthermore, because most people are averse to large risks, we’ll actually overpay slightly on the small policy premium, and hence insurance companies can make a living off that bit extra that we’re willing to pay.

Now why do people play the Lotto!?!?

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