Preference between a certain small return and a variable larger one depends on whether the certain return is sufficient to survive.
The rule is that an animal on a positive energy budget takes the safe option and one facing a shortfall takes the gamble, because when the certain outcome means starvation, variance is the only route to survival. It predicts risk preference from circumstance rather than from disposition, and the same individual reverses when the budget does.
In practice
- A firm with reserves takes the reliable contract; the same firm three months from insolvency bids for the long shot.
- A person who would never gamble does so when the certain outcome is losing the house.