This may be a little vague but I’m trying to make a decision with my head and not my heart. If I provide all the information straight away it may or may not change your decision. I’m looking for logic instead of emotion. So in the scenario below, what would you do and why?
Your about to take part in a game to win a money can’t buy prize, based on previous players statistics you have a 55-60% chance of wining each time.
It will cost you £5000 to play the game.
You can pay for one go at a time, with a no money back policy. If you lose, the cash is gone, but you can play again for another £5000.
Or you can buy 3 goes for £13000, and if you do not win in 3 goes you get a 100% refund. But if you win on the 1st or 2nd go, you don’t get your other goes and you loose all the money.
There is no other way to win the prize, you can not buy it.
What option do you choose?
I will add other info after a while to see if your decisions change.
The prize is something that you want more than anything else, it’s priceless and you can only get it by taking either of the gambles above. It has no financial value.
I was writing a reply assuming that you were betting £5K to win £5K at better-than-coinflip odds and were testing people’s risk aversion, but then I saw this:
It’s kind of a worthless question without assigning a monetary value to the prize. Given this condition, who wouldn’t take out a £50K loan for 10 shots at this prize knowing that it’s all but guaranteed they’ll win it within 9-10 goes?
If the prize is £10,000,000 or worth that much then I’m taking out as many loans as I can to make that £13K bet as many times as possible obviously.
The £5K bet gives me a 57%ish chance of winning whatever this prize is. We assume it’s worth my risking significant cash for it.
The £13K bet gives me a 7% chance to freeroll the bet, plus each wager costs £750 less. I’m not going to open Excel and do EV calculations on it but it strikes me as being a significantly more favourable proposition than the £5K bet.
EDIT: I don’t know if you’re implying the £13K is a one-time-only. If so obviously take the £5K as many times as it takes to win.
If it’s priceless, then the £13,000 with guaranteed refund if not successful is a fair deal and the safest way to guarantee* you get the prize for effectively a fixed price, as opposed to risking £5,000 multiple times.
*If the £13,000 option doesn’t work first three tries, can I buy another three tries with my refund?
This is based off a real life situation that I’m currently in and in that situation there is no monetary value to the prize.
Thanks for your opinion on it, I will add a bit more information as we go. I keep going back and forth in my head about what option would be best, but when you know all the details it gets confusing so was hoping to see how each factor I have to consider effects what people would do.
Good question, after the refund the 3 try offer is off the table, you can continue after the 3 times at a £5000 a go, but after 3 failures the odds on subsequent tries drops to 30%. Basically the more failures the less likely you are to ever succeed.
Now, I believe the likelhood that I will win at least 1 game at those odds is above 90% (if I used the calculator right haha)
Those are prettu damned good odds but if this is a priceless thing that I desperately have wanted enough all my life, then they may not be good enough.
.425*.425*.425 = odds of not winning any of the three. Roughly 7%. You then get a refund, so it’s a freeroll; 93% chance of winning “the prize” or a 7% chance of breaking even. If you get to play again with the £13K refund then you have a 99.5% chance of winning.
This doesn’t make sense… if it’s a priceless thing you’ve desperately wanted all your life a 93% chance of getting it should be worth more than £12,090 (£13K *93%).
I read that as you get 3 plays and that’s it. The 3 plays cost you 13K regardless of whether you win on play 1, 2 or 3 but it costs you nothing if you lose.
This a no brainer then. If the thing is worth that much to you - say the cure for a terminal illness your kid has - you’re just going to keep going regardless.
Yeah in that situation your right, this is not quite that.
The reason I’m having a problem with this is I have played the game before and was lucky enough to have won on the second go. Now I want to try my luck and win again. The £5000 a turn option gives me more control, I can quit if a problem occurs or something comes up that changes the situation. Also greed (hard to call it that but it is what it is) what if I want to win another 2 times, i could potentially win 3 times for £15000. If I commit the £13000 and win first time, that’s money I could use to win again. I hate thinking like that and if I never win again I’m happy, but if I was in the same position as 99% of the population I wouldnt even be needing to take this gamble, I could just have the prize as many times as I like!
I am not a gambling person at all, when things are out of my control I never gamble.
My mind went straight to proposing to a woman for some reason. But there’s no way you get more than three tries.
Is it a citizenship lottery for you and your family to a new country?
Either way, play the $13k money back method. And then play the $5k method even with the reduced odds assuming you lost the first 3 free tries. That’s the most cash efficient way to win at least once.
If the prize in question is priceless, but can’t be sold… why do you want more than one?
maybe I will question that if I’m lucky enough to win again! I will clear up what the prize is at some point when I hear a few more people’s opinions.
In theory I would pay everything I had, but reality is that would be very stupid.
The more I think about it the more the 3 try offer appeals to me, but at the back of my mind I want to take the gamble at least once to see if i can win again first time. I need to look into if the 3 try offer is still available after another individual try.