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OK>>>
>> but, I will have one last crack of explaining......
>> >> "VOYL = MP / PSYL
>> >> where
>> >> MP = Maximum Payment (the most you would be willing to pay) PSYL = probability of saving your life."
>> Therefore-
>> MP / PSYL = VOYL
>> MP in the cause of a bomber who is paid say $1000 dollars for his family would achieve the MP value of -1000.
>> PSYL we will use your value of -0.97.
>> Therefore the VOYL would be
>> = -1000/ -0.97 which will equal
>> = + 1030 (3 sig fig)
Your reasoning is pretty much right - suicide bombers sell their lives for
$1030. However you have missed a vital point - MP was the maximum you
would be willing to pay, not the amount which was actually paid. [In the
case of the -$1000 maximum is towards to zero, not further away]. $1000.00 may
be the market rate, but the point of indifference for the suicide
bomber is almost certainly a higher value. If the suicide bomber is willing to do it for a payment of 1c, his life has
almost zero value. If the suicide bomber is willing to pay for
exercise (willing to buy his own TNT vest, willing to pay for suicide bomber
school etc), then the amount becomes positive, and hence the value of his life
becomes negative. For instance, if he is willing to pay $200 for his TNT suit, and $800.00
for lessons on how to use it, then he is willing to pay $1000.00 to blow
himself up.
VOYL = +1000 / -0.97
= -1030 (3 sig fig).
Hope this clears it up.
>> Ok... here we go... In the cause you suggested (where you disregarded my
>> angle of the bomber using the backpack might break his fall, suggesting
>> probability of saving life almost nill....) >> In your examples there is almost 100 percent probability of causing an
>> accident? And there is a -97% chance of saving their life... this would suggest
>> a -9700% chance of saving your life.. I know you aren't that stupid, but just in case there are any readers who
don't know basic maths, here goes. If there is a probability of 0.99999 that the bomber will pull the trigger, and a
probability of 0.97 that it will go off and kill him (and maybe a few hapless
Kurds as well), then the combined probability is
0.99999 x -0.97 = -0.9699903
which gives
-1000 / -0.9699903 = $1030
that's $1030, not $10.30. the % sign means per cent - generally you have to divide by 100
before you actually put the value into formula. Remember that the original
equation required a probability not a percentage. Anyway, I actually more important things to do than to teach remedial
maths. Enjoy playing with your calculator.
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