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by chronial
2896 days ago
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Have a look at the expected utility Wikipedia article. In short: The difference between owning a total of 0 and a total of 10000 USD is way more important than the difference between owning 10000 and 20000 USD. So assume you have 20000 USD. There's a 10% change that you will lose it all and become homeless. It makes sense for you to pay 2000 USD at the start to get 10000 USD back in case that happens. Because being homeless in 10% of the cases is way worse than having 18000 USD instead of 20000 USD in 90% of the cases. |
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