Consider a scenario where an individual faces a choice between a “good” life choice and an “ungood” life choice. Both option result in a risky health situation, although the risk is conditional on the choice made. There is also a guaranteed positive benefit ($U) from making the ungood life choice. The tables below depict odds and costs associated with each choice:
Good:
|
Probability |
Cost |
|
|
Healthy |
0.99 |
0 |
|
Sick |
0.01 |
-1000 |
Ungood:
|
Probability |
Cost |
|
|
Healthy |
0.8 |
0 |
|
Sick |
0.2 |
-1000 |
Given these situations, how much must you value the guaranteed positive benefit ($U) to rationally choose the Ungood choice?
