which of the following compensation schemes would you choose for yourself
If you’re thinking of becoming day trader by this question, DONT !
It depends on what you already have. Let’s say you have 0 in your account, then option 1 is better. If you have enough for a year, option 2 is better.
By the same token, if you're young option b is better. But if you're old or gonna die soon, option a is better
Option B > Option A if you like money
All in
The only way to play
It makes sense both mathematically and practically. From a practical side even if it was 50:50, if you come out positive, you get twice the reward. If you get 0, you can basically stop and do something else, like going back to the safe option. You wouldn't keep doing 0 forever.
statistically speaking, option b is equivalent to 12,000 guaranteed income so it is better.
E[salary]
Yeah but if you're unlucky and get $0 2-3 months in a row you cant pay your bills.
It depends on how long you are going to work. Under 2-3 years, I would go for option A. Longer than that, B.
While Option B is higher (statistically) ... but going all in for 2k extra is stupid. The upside is no where near the risk of the downside. 2k a month is not going to change your life .. homelessness will.
Results Illustrate the principle for which Kahneman and tversky won the Nobel prize in economics. Don’t you think?
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Option b sounds more like owning your own business