The first pair looks like this:
A: 100% chance of winning 1000 USD.
B: 89% guarantee of winning 1000 USD, 10% chance of winning 5000 USD, and 1% chance of losing.
The second pair of solutions looks like this:
C: 10% chance of winning 5000 USD, 90% chance of losing.
D: 11% guarantee to win 1000 USD, 89% chance to lose.
The results of the experiment showed that most people choose A and C. At first glance, there is nothing paradoxical here. However, mathematical calculations indicate the opposite.
If all people acted solely on the basis of calculations, they would prefer B in the first pair. In options B and C there is only 1% increased risk. At the same time, it is capable of bringing an additional profit in the amount of 390 USD.
It is easy to verify the correctness of the calculations.profit for each choice in two pairs:
A: 1000 USD * 1 = 1000 USD.
B: 1000 USD * 0.89 + 5000 USD * 0.1 = 1390 USD.
C: 5000 USD * 0.1 = 500 USD.
D: 1000 USD * 0.11 = 110 USD
Next, you need to determine the difference in mathematical france customer email list expectations for each case. The calculations will look like this:
A and B: 1390 USD – 1000 = 390 USD.
C and D: 500 USD – 110 USD = 390 USD.
It turns out that choice B is more advantageous than A, as much as C is preferable to D. At the same time, in all experiments B was invariably in low demand. At the same time, C was preferred by almost all subjects.
This is explained by the fact that in the 1st pair A is absolutely reliable. In the 2nd case, there is no choice with 100% reliability. Therefore, people quite easily agree to a 1% risk. Such decisions are easily explained by the peculiarities of the human psyche. However, if we analyze both pairs of choices mathematically, we get paradoxical results.