Hypothetical Gambling Situation

[DavidC]

Shill, I ALWAYS smoke the good stuff. [img]/images/graemlins/smile.gif[/img]

Eegah's right, but I considered time to be a minor factor in this case.

Badger has the correct answer, and the correct reason.

I made our "hero" have very small marginal utility of money, but positive marginal utility of money, between 15k and 30k, therefore it's best to quadruple up, because it sucks to lose the 10k, just like badger said. [img]/images/graemlins/smile.gif[/img]

This saves you from that 25% of the time where you win the first one but lose the second one. [img]/images/graemlins/smile.gif[/img]

So there are three factors:

1) Time (not really important)
2) Utility of Money (if it sucks worse to lose 10k than 5k, then quadruple rather than double if you have huge utility at 30k (+20k))

3) Something that I didn't consider before tonight, if you actually enjoy gambling, then it would be best for you to double twice. However, I'm not 100% sure, but I think that this is the type of person who would gamble at -EV recreationally in order to gain the utility of gambling. Anyways, I cut this possibility out by saying hero didn't particularly like to gamble.