No, UB, you are wrong. Just take my word for it. Many people would take a guarenteed 85k over a 75-100k chance. Even you may do so if given the actual opportunity. Sure, maybe you wouldn't. But lets say you have a family and kids who would really, really like that extra 10k. In that case, you have high risk aversion, and you may take the 85k option.
I'm talking about risk aversion in a technical sense.
Edit: Essentially the 85k issue breaks down as follows:
75k is guarenteed, so forget it... the real gamble here is 10k vs. 0 or 25k... would you turn down $10 thousand for a 50-50 flip where 50
% of the time you get 0 and 50% of the time you get 25k? The answer depends on your level of risk aversion. For many people, the initial 75k would make them less risk averse, so they may go ahead and gamble on the 2nd portion. But some people will still be risk averse even after the initial 75k, in which case they will take the guarenteed value.
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