If you have some utility function that depends on the amount of money you have, then the improvement from a bet that offers a 45% chance of winning a prize to one that offers a 55% chance is identical to the improvement from a bet that offers a 90% chance to one offering a 100% chance.
Note that this holds only when you have no “intermediate choices”.
Suppose you are pretty short of cash at the moment. And you might be getting a prize tomorrow. You have a chance to buy a fancy meal now. If you buy the fancy meal, and then don’t get the prize, you will really be struggling to pay off your bills. So it only makes sense to buy the fancy meal if you are >95% sure that you are getting the prize.
In this setup, it does make sense to value the extra certainty.
This is all assuming you don’t terminally value certainty in and of itself. You terminally value something else. (If not, then you risk being money pumped where you pay to learn info, even though you can’t use that info for anything)
But even if certainty isn’t a terminal goal, it can be an instrumental goal.
The framing effect thing is about the chance of winning some prize. Why would you want certainty, what you want is the prize.
If you have some utility function that depends on the amount of money you have, then the improvement from a bet that offers a 45% chance of winning a prize to one that offers a 55% chance is identical to the improvement from a bet that offers a 90% chance to one offering a 100% chance.
Note that this holds only when you have no “intermediate choices”.
Suppose you are pretty short of cash at the moment. And you might be getting a prize tomorrow. You have a chance to buy a fancy meal now. If you buy the fancy meal, and then don’t get the prize, you will really be struggling to pay off your bills. So it only makes sense to buy the fancy meal if you are >95% sure that you are getting the prize.
In this setup, it does make sense to value the extra certainty.
This is all assuming you don’t terminally value certainty in and of itself. You terminally value something else. (If not, then you risk being money pumped where you pay to learn info, even though you can’t use that info for anything)
But even if certainty isn’t a terminal goal, it can be an instrumental goal.
The framing effect thing is about the chance of winning some prize. Why would you want certainty, what you want is the prize.