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8.1 Risk Aversion and the Expected Values

In this video, low-stakes decisions are examined and the concept of risk aversion is introduced. Using the example of gambling, low-harm decisions that have positive expected values are encouraged.

8.2 Should I buy Extra Warranty?

This video describes warranties and the logic behind them. The sale of warranties is ultimately profitable for the company, which calls into question the benefit that a warranty has for a customer. The distinction between low- and high-stake decisions is emphasized and the importance of warranties to each type is investigated.

8.3 Stocks or Real Estate?

Employing the example of investment, this video continues the discussion of approaching low-stake decisions using the maximum expected value principle. The principle of diversification is introduced in connection to the Law of Large Numbers. The choice between investing in stocks and real estate is considered.