A worker accepts a dangerous job after being offered an annual bonus of $2,000.

Question

A worker accepts a dangerous job after being offered an annual bonus of $2,000. The probability that the worker may be killed in any one year is 1 in 10,000. This is known to the worker. The bonus may therefore be interpreted as a self-assessment of life with a value equal to $2,000 divided by 1/10,000, or $20 million. Is the worker more or less likely to accept the job if presented with the statistically nearly identical figures of a $100,000 bonus over 50 years (neglecting interest) and a 1/200 probability of a fatal accident during that period?

Explanation / Answer

self-assessment of life= $100,000/(1/200)=$20 million

But the worker is less likely to accept the job.

This is because the worker will get the bonus after working for 50 years. But the probalility of a fatal accident for a period 50 years is 1/200 . Which is 50 times higher than the previous job which he accepted.so,the worker is less likely to accept the job.

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