Consider: you own a house which has a 0.01 probability of burning down in the next year, imposing a $100.000 cost on you when it does, and a 0.99 probability of not burning down. On average, you pay $1000 to cover the damages.
An insurance company provides you with full coverage for fire damage at $1100 per year, which is $100 more than you would pay on average to cover the fire damage without insurance. So why do you purchase the insurance? As David Friedman puts it, "a dollar is not a dollar is not a dollar": money has a declining marginal utility, i.e. if you increase your consumption of money by one unit, it will not provide as much utility as the previous unit of consumption. This is why we do not work 24/7, as there is a level of income at which the money we earn by doing one extra hour of work does not provide as much value as leisurely activities. Conversely, dollars become more valuable the less of them you have. When your house burns down, you lose money, so the dollars you retain after covering the fire-damage become more valuable than they currently are to you. This difference in value is why you are willing to pay an extra $100 to the insurance company. What does any of this have to do with the multiverse in which quantum theory says we inhabit? It provides an alternative picture of the previous situation: in the multiverse, there are (as the name suggests) multiple instances of you, each of which is slightly different from the 'you' in this universe. all of which share a common history that diverged at some point in time. When you are not insured, 99% of your multiversal counterparts are unaffected by that choice, whereas the remaining 1% has to spend $100.000 in order to restore their property. By buying the insurance policy, you move from the above situation to a situation in which all your counterparts pay $1100. This is a move towards certainty—i.e. towards making your multiversal counterparts alike, and explains why you pay the extra $100. Interestingly enough, it is a general feature of the multiverse that knowledge—in this case, the invention of insurance—makes the separate universes more alike. For example, the creation of Netflix has made it easier to watch good films. So films that, before the invention of Netflix, would have been watched by only some small number of versions of you, will now be watched by many more, perhaps the majority of your alternatives across the different universes. (The example of fire insurance comes from David Friedman's excellent book 'Law's Order'.)
0 Comments
|