Would you gamble with a huge amount of money?

Say you were offered to take part in a game:
In front of you is a bucket that contains 999 small black balls and a single white ball and a shipping container filled with 1 billion dollars (because as Hollywood doesn't tell you, a lot of money takes A LOT of space).
If you can successfully pick out the white ball from the bucket (without looking, of course), all that money is yours.
To make it easier, you can remove however many black balls from the bucket, but for every ball you remove, a million is taken out of the container, meaning you can remove all 999 balls and have guaranteed million.
What would you do?

You can send me the Million, please.

No variance, same expected value.

Quote: noy2222

Say you were offered to take part in a game:
In front of you is a bucket that contains 999 small black balls and a single white ball and a shipping container filled with 1 billion dollars (because as Hollywood doesn't tell you, a lot of money takes A LOT of space).
If you can successfully pick out the white ball from the bucket (without looking, of course), all that money is yours.
To make it easier, you can remove however many black balls from the bucket, but for every ball you remove, a million is taken out of the container, meaning you can remove all 999 balls and have guaranteed million.
What would you do?

When you ask "Would you gamble with a huge amount of money?" you confuse me.This implies that I own a huge amount of money that I can willfully gamble with.
Did you mean to say gamble for a huge amount of money?
Sure anybody would play that freeroll.
What does it cost me to play the game?
Sorry to say this noy2222 but what a horrible post.

KB1

Quote: noy2222

In front of you is a bucket that contains 999 small black balls and a single white ball..........you can remove all 999 balls and have guaranteed million.

How would the million be "guaranteed"? There are 1000 balls in the bucket. It would be possible for the white ball to remain after picking out 999.

Quote: Puckerbutt

How would the million be "guaranteed"? There are 1000 balls in the bucket. It would be possible for the white ball to remain after picking out 999.

While it wasn't completely clear, I belive it would cost $1m per ball, BEFORE you actually make your draw.

So if you paid $999m there would only be one ball left in the bucket, and you would be forced to pick the white one, and win the remaining $1m.

The real question is why the ball gotta be white?

Because 999 fuchsia balls and 1 vermillion ball might be confusing.

Quote: thecesspit

You can send me the Million, please.

No variance, same expected value.

Ditto. Plus, the marginal utility of the first $1M in winnings is (to me) far, far greater than the marginal utility of subsequent millions of dollars. I hope that will change at some point in my life, but right now I don't have 8 figures in the bank so I can't afford to be passing up a million risk-free dollars.

As a follow-on question, suppose there were only two options: draw at 1/1000 for a billion dollars, or take a guaranteed X, where X <= one million dollars. How low would X have to be in order for you to draw for the billion? Ex: If you were offered $800,000 risk-free, or a 1/1000 chance of $1,000,000,000 (with $0 otherwise) which would you choose? (I'd choose the $800,000).

To the OP: look at prospect theory for more on these sorts of questions.

In my mind, a 1/1000 chance to win a billion just seems like a waste. Sure, I'd be excited to win, but prepared to lose and I'd kick myself for giving up any significant amount of money for it.
I imagine a year or two salary is a good trade off not to play.

Quote: MathExtremist

As a follow-on question, suppose there were only two options: draw at 1/1000 for a billion dollars, or take a guaranteed X, where X <= one million dollars. How low would X have to be in order for you to draw for the billion? Ex: If you were offered $800,000 risk-free, or a 1/1000 chance of $1,000,000,000 (with $0 otherwise) which would you choose? (I'd choose the $800,000).

Looking at the utility of money being the log of your net worth, a person with a net worth of $100k should take $925 over a 1/1000 chance of $1billion. And someone with a net worth of $1 million should take $6,933. I think my answer is way above my net worth, but way below $800,000.

I'd probably take $100,000, but first I'd try to sell my position to someone else. What would you pay for a 1/1000 chance to win $1billion.

Since I'm guaranteed not to lose and I think the expected win is $1,000,000,000.00/e, I'd have Warren Buffet put up the $ for me and start plucking away.

Quote: MathExtremist

As a follow-on question, suppose there were only two options: draw at 1/1000 for a billion dollars, or take a guaranteed X, where X <= one million dollars. How low would X have to be in order for you to draw for the billion? Ex: If you were offered $800,000 risk-free, or a 1/1000 chance of $1,000,000,000 (with $0 otherwise) which would you choose? (I'd choose the $800,000).

For me, it would have to me a near meaningless amount, say $4,000.00 and here's my reasoning; at 1/1000 the chances of winning the billion bucks is not realistic. Any amount of free walk away money would be awesome and I'd never sweat the billion.

Quote: s2dbaker

Since I'm guaranteed not to lose and I think the expected win is $1,000,000,000.00/e, I'd have Warren Buffet put up the $ for me and start plucking away.

Unless I misunderstood, it's a one shot deal. Not a multiple pull, and you lose a million every time you fail to grab that white ball. You decide how many balls in the pot, and get a 1 in x chance to win a x million dollars.

I'm surprised the log value is as low a $925 to walk away from a 1/1000 chance to win a billion. At $5,000 I'd probably take then money rather than the ball.

My price point... the time I would take the 1/1000 chance at a billion over immediate, is about $25000 immediate. Above that payment, I'll definitely take the money. Below that immediate sum, I'll take the 1/1000 for a billion.

Everyone's price point would change, but I'm early in my life and $25k would change it.

I would take $50,000 cash over a 1/1000 chance at a billion.

However, what I would really try to do is sell percentages of my chance to wealthy investors looking for a home run return. Realistically you could probably sell enough shares to get about $500,000 cash for your 1/1000 chance at a billion.

And if you had a lot of time, you could probably sell 1 million $1 shares -- like a mega-lottery with no house edge!