Is Game Theory Applicable Here?

[ohnonotthat]

Aaron, or is this simply a complex (or maybe not so complex) case of utility theory ?

I'm going to now read all the responses - both to the original thread and to your tourney settlement question - but before doing so I'll state that I've taken the worst of it many times in order to minimize the chance of disaster.

I posess the resources, albeit just barely [img]/images/graemlins/frown.gif[/img], to post a bond in lieu of paying for liability coverage on my car but I'd never entertain the thought of actually doing so.

[ohnonotthat]

got a link to that ?

It's likely to be over my head but I can dream of the day I'll understand it. [img]/images/graemlins/confused.gif[/img]

The Allais "paradox" isn't an example of people behaving incorrectly, it's an example of a problem with the standard economic way of analyzing decisions under uncertainty (ie assume a concave utility function to account for risk aversion). Realisticly, people aren't bankrolled for life. You're going to have to deviate from maximizing EV once you get outside of the realm of poker, and it's not entirely clear what the best way to do that is. I'm not comfortable with calling something that occurs so frequently as the preference reversal problem (Allais paradox) a reasoning error.

[Chipp Leider]

You might wanna look into Certainty Equivalent.