

What's the probability we're idiots? - tyre
http://compphi.com/2012/01/04/whats-the-probability-that-were-idiots/

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psyklic
I'll play the devil's advocate.

Casinos - The odds for many games are only slightly in the casino's favor.
Most of my friends go to casinos because they're fun and provide
entertainment, not to invest their money!

Insurance - If the man absolutely needs the lawnmower, yet can't afford a new
one every two years, insurance suddenly seems more attractive. Common
insurances, like car, health, life, home, etc. are based on this. After all,
if you have unlimited money, you wouldn't buy insurance.

Religion - There is supposedly an eternal reward if you believe and the belief
is correct. There is no reward if you don't believe, whether the belief is
correct or not. Having a slight chance of an eternal reward is certainly
better than having no chance at all.

~~~
bradleyland
My thoughts exactly. Any complete risk analysis factors in what lies on the
"other side" of the event you're insuring against. Not to mention, the value
of something is relative. An example:

Let's say you need a car to commute 30 miles to work (no public transit
available). You have a monthly surplus income in the amount of $700 --
provided you keep your job, which means you have to show up every day. You
drive a modest, but reliable, used car that cost you $8,400 to purchase. If
the car were a complete loss in an accident, it would take you 12 months of
surplus income to purchase a replacement. However, if the car is suddenly
unavailable to you, getting to work reliably becomes an issue. Opportunity
cost! In this case, it makes sense to use a portion of your surplus income to
insure the car.

The same might be true of someone who relies on a lawn mower for work. A
better example might be a laptop like a MacBook Pro. I use a nicely equipped
MacBook Pro that cost me around $2,700 to purchase. When I was just getting
started as a freelancer, I bought a 100% replacement warranty from
SquareTrade.com for a couple hundred dollars because I only had enough money
to buy the laptop one time. Now that I can afford to replace the laptop any
time, I take the risk myself and keep the $250.

