But if you follow this strategy, it is guaranteed that you will eventually lose everything. You will go home with nothing. And that seems irrational.
It is not irrational, just a case of revealed preference. It intuitively doesn’t sound good because your utility function for money is not linear: otherwise you would be indifferent at losing money. Indeed, humans are more risk averse than linearly allowed.
It is not irrational, just a case of revealed preference. It intuitively doesn’t sound good because your utility function for money is not linear: otherwise you would be indifferent at losing money. Indeed, humans are more risk averse than linearly allowed.