Consider a scenario where an individual faces a choice between a “good” life choice and an “ungood” life choice. Both option result in a risky health situation, although the risk is conditional on the choice made. There is also a guaranteed positive benefit ($U) from making the ungood life choice. The tables below depict odds and costs associated with each choice:

Good:

	Probability	Cost
Healthy	0.99	0
Sick	0.01	-1000

Ungood:

	Probability	Cost
Healthy	0.8	0
Sick	0.2	-1000

Given these situations, how much must you value the guaranteed positive benefit ($U) to rationally choose the Ungood choice?

Answer rating: 100% (QA)

The expected cost associated with making a good life choice is 09900... View the full answer