When does vulture financing generally take place?
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Imagine that you’re a contestant on a game show in which you must answer multiple-choice questions. Your current winnings are $20,000. A question comes up that will double your winnings if you answer correctly – taking you to $40,000 – or reduce your winnings to nothing if you answer incorrectly. You may do one of two things: take your $20,000 and walk away; or answer the question and end up with either $0 or $40,000. You reason that you have a 60% chance of answering the question correctly. However, you decide to walk away instead of answering. What type of bias does this choice represent?
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