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The gamblers that think they have an edge with r = g in your example are suckers wasting their time. Would you agree?

bjourne 9y ago
On average they are. However, if the game was skill based, like playing chess for money instead of coin flipping, then it would be easy for gamblers to get an edge by being skilled enough. If we consider investing more like playing chess than coin flipping, then in the r = g scenario, the economy would reward smart investors with huge profits. Dumb investors would lose all their money. As it should be.
- arkis22 9y ago
  So your analogy is smart chess players playing against stupid ones, but both players can only bet a dollar and win 2? That scenario only "works" if you have a limitless supply of suckers. Sooner instead of later the worse players will realize they need to be able to win more than a dollar to compensate for their risk. The result is an unvirtuous cycle where the bottom players keep dropping out because their odds are getting worse and worse.
  - bjourne 9y ago
    Given that people happily play on in casinos where the odds are significantly worse than even, I think it is safe to rely on the universe providing us with an infinite supply of suckers. Anyway, a fairer stock market wouldn't have to be a completely zero-sum game. It would just not have to be as heavily tilted in favor of the gambler/investor as it is today.
    - arkis22 9y ago
      The smart people that go into a casino aren't expecting to come out ahead, they walk in knowing they're probably going to burn a couple hundred bucks. They also get to leave, which is why they're willing to play at worse odds for a short time. Given that, I don't think its safe for you to rely on an infinite supply of suckers. What if they want to go to a different casino that gives them better odds, will you force them to stay? If they can't leave they'll figure out who they shouldn't play against because they'll lose. So now are you forcing them to play? Now you're either micromanaging which ones should play against each other to make sure nobody ends up broke, or you're actively forcing them into poverty. Is this a casino you'd like to visit?

On average they are. However, if the game was skill based, like playing chess for money instead of coin flipping, then it would be easy for gamblers to get an edge by being skilled enough. If we consider investing more like playing chess than coin flipping, then in the r = g scenario, the economy would reward smart investors with huge profits. Dumb investors would lose all their money. As it should be.

arkis22 9y ago
So your analogy is smart chess players playing against stupid ones, but both players can only bet a dollar and win 2? That scenario only "works" if you have a limitless supply of suckers. Sooner instead of later the worse players will realize they need to be able to win more than a dollar to compensate for their risk. The result is an unvirtuous cycle where the bottom players keep dropping out because their odds are getting worse and worse.
- bjourne 9y ago
  Given that people happily play on in casinos where the odds are significantly worse than even, I think it is safe to rely on the universe providing us with an infinite supply of suckers. Anyway, a fairer stock market wouldn't have to be a completely zero-sum game. It would just not have to be as heavily tilted in favor of the gambler/investor as it is today.
  - arkis22 9y ago
    The smart people that go into a casino aren't expecting to come out ahead, they walk in knowing they're probably going to burn a couple hundred bucks. They also get to leave, which is why they're willing to play at worse odds for a short time. Given that, I don't think its safe for you to rely on an infinite supply of suckers. What if they want to go to a different casino that gives them better odds, will you force them to stay? If they can't leave they'll figure out who they shouldn't play against because they'll lose. So now are you forcing them to play? Now you're either micromanaging which ones should play against each other to make sure nobody ends up broke, or you're actively forcing them into poverty. Is this a casino you'd like to visit?