Isn't this the standard case of paying a premium for risk? An assured $500 dollars is worth more than 50% chance of 1200 dollars.
Isn't this the standard case of paying a premium for risk? An assured $500 dollars is worth more than 50% chance of 1200 dollars.
It's the opposite, the author is saying is that you have to consider the dynamics of how you're getting the money. In his view, an opportunity to work 5 days for an assured $500 may be worth less than the opportunity to work 5 days for a 50% chance of even $900, even though $500 > $900/2. If you expect that 50% chance to be resolved by the end of day 1, you can just quit the second job, and if there's a third job that will pay you just $200 for the remaining four days (half the job 1 rate) then the EV increases to $550.