Let’s try a new card game. Losing isn’t death, it’s 50 years of torture, followed by death in the most horribly painful way imaginable, for you and everyone you know. We’ll say that utility is zero, your current utility is one, and a win doubles your current utility. Do you take the bet?
Or, losing isn’t death, it’s having to listen to a person scratch a chalkboard for 15 seconds. We’ll call that 0, your current situation 1, and a win 2. Do you take the bet?
This is the problem with such scaling. You’re defining “double your utility” as “the amount of utility that would make you indifferent to an even-odds bet between X and Y” and then proposing a bet between X and Y where the odds are better than even in your favor. No other definition will consistently yield the results you claim (or at least no other definition type—you could define it the same way but with a different odds threshold). It proves nothing useful.
The example may not prove anything useful, but it did something useful for me. It reminded me that 1) we don’t have a single perfect-for-all-situations definition of utility. and 2) our intuition often leads us astray.
Let’s try a new card game. Losing isn’t death, it’s 50 years of torture, followed by death in the most horribly painful way imaginable, for you and everyone you know. We’ll say that utility is zero, your current utility is one, and a win doubles your current utility. Do you take the bet?
Or, losing isn’t death, it’s having to listen to a person scratch a chalkboard for 15 seconds. We’ll call that 0, your current situation 1, and a win 2. Do you take the bet?
This is the problem with such scaling. You’re defining “double your utility” as “the amount of utility that would make you indifferent to an even-odds bet between X and Y” and then proposing a bet between X and Y where the odds are better than even in your favor. No other definition will consistently yield the results you claim (or at least no other definition type—you could define it the same way but with a different odds threshold). It proves nothing useful.
The example may not prove anything useful, but it did something useful for me. It reminded me that 1) we don’t have a single perfect-for-all-situations definition of utility. and 2) our intuition often leads us astray.