The percentages are much less clear, as are the payoffs. I was attracted less by the monetary payoff of the entrepreneurial life than the other, less tangible benefits: responsibility, control, independence, learning opportunities, challenge, etc. I'm not attracted to safety, I'm afraid of boredom.
We get a thrill from gambling sometimes even though we know that the odds are stacked against us. Arrington is drawing the same analogy for entrepreneurs, and that's a bad analogy. It's a romantic notion, but I don't think the monetary valuation of an entrpreneurial venture is negative in the minds of entrepreneurs.
Tell you what: I tried to go with my gut feeling on every question. I am very risk-averse, but the idea of gaining money doesn't mean that much to me. Winning $100 vs $1000 isn't that emotional for me. Oh, sure, I'd like $1000 but I don't even care about $100. I thought about scaling the numbers up til they mattered to me, and decided I'd almost always take the sure thing because I could turn that money into a higher amount thru investing it in expanding my product.
But I would gladly pay $250 instead of even a slight risk of losing $1000. (Or whatever the numbers were I've forgotten already!) IRL, I've bought a new car because I'd rather pay a couple grand more than have the uncertainty of potential repair bills, etc. Clearly I hate negative unknowns.
That risk aversion has clearly influenced the type of "startup life" I've chosen. My products are "boring," but quite profitable. No funding, no 80 hour weeks, no sleeping under the desk, and no potential to be gobbled up by Google, either.
Nevertheless, I find this far less risky than having a job, because nobody can fire me from my own company! Plus, I'm not miserable because people are always screwing with my work.
That said, I think part of the special startup mindset is similar to the people who will bet more on dice they've rolled than dice rolled by someone else... whether a startup is acquired feels like something they can control, however irrationally.
Maybe you could ask what people believe is the average chance of acquisition for a startup in general, and what they believe their chance is?
Personally I had the same dilemma, but I found it revelatory to really look inside myself and see if I could do what expected utilities would dictate. It was especially difficult on the loss questions, as I have very little capital to my name.
For example, let's take one of the loss scenarios and pretend that it's some wacky hosting cost.
* $50 guaranteed loss - paying $50 for 100GB of bandwidth
* 0.04% of chance of $1,000 loss - paying $2.50 for 100GB of bandwidth, but an extra $997.50 for unlimited bandwidth if you go over 100GB.
If I don't expect to do much traffic, I'll take the 4% chance; I project I might do 20GB of traffic during the term of the contract, so I will save 20x as much money. My product has a 4% chance of going viral. If I lose the contract lottery, it's because I've won the product lottery, and that 4% means I've got a rapidly-growing product that is going to make me a lot of money. The risk of that extra $1000 is well worth knowing that I'm not going to have to move my product between hosting providers when the blogosphere in in a mad frenzy about my internet tortilla delivery service.
That's completely different than a scenario wherein the hosting provider says "This is a variable contract; you owe us $2.50 for 50 GB of bandwidth, but each month we pick one of our 25 customers and they pay $1,000." There's no way in hell I'd sign on for that. There is no indicator of success correlated to the risk there.
Without context, I'm not sure that these questions are all that useful. You point this out yourself - the risk questions will be interpreted variably depending on the individual's resources and perspective. I can absorb a $50 loss trivially, so if the reward is equivalent, I'll choose that.
You treated it like a school test, looking for the "right" answer. To paraphrase Nicholas Nassim Taleb, if a coin falls head 100 times straight, the chances it will fall tails the 101 time are 50% only in academia - in the real life the coin is fixed.
I've never seen a survey that wasn't easily manipulatable. So I guess we have to rely on people to try to be honest...
Choosing between
a) 100% chance of $10 vs 10% chance of $100
is very different question than choosing between
b) 100% chance of $100K vs 10% chance of $1M.
or
c) 100% chance of $1M vs 10% chance of $10M.
I think many people will choose 10%/$100 combo of a) just for the thrill.
The latter two are of course dependent your financial situation, but hit an interesting sweet spot for YC crowd.
What would be your choices?
Insuring against small losses is a net financial loser, or else the insurance company wouldn't offer it.
Naive rationality may be easy to analyse but that just means that the GIGO transfer doesn't cost much.