I make a big assumption, that the utility gains are multiplied together. There is some basis to it like if there are some independent sources of fatality, the chance to survive all of them is the product of the survival chances for each fatality source.
If you want to maximise the result of the multiplication, then take the logarithm, and it turns into a sum. In that formulation, you can see that it’s not the absolute change that is important, but the relative one. Here I wanted to show an example of it, like a risky vs safe bet over 1 vs 50 year, but I kinda got stuck, and realized I don’t really understand it, so I retract, but thanks for the question.
I make a big assumption, that the utility gains are multiplied together. There is some basis to it like if there are some independent sources of fatality, the chance to survive all of them is the product of the survival chances for each fatality source.
If you want to maximise the result of the multiplication, then take the logarithm, and it turns into a sum. In that formulation, you can see that it’s not the absolute change that is important, but the relative one. Here I wanted to show an example of it, like a risky vs safe bet over 1 vs 50 year, but I kinda got stuck, and realized I don’t really understand it, so I retract, but thanks for the question.