4 ms·

> the starting point is always higher than the absorbing barrier. true - also a tautology > justifying the fact that people are more willing to bet with "hous

by platz 9y ago

> the starting point is always higher than the absorbing barrier. true - also a tautology > justifying the fact that people are more willing to bet with "house money" - this is clearly wrong I don't think you exactly showed that.

OscarCunningham 9y ago
I think I showed why his justification is wrong. But if I wanted to explain why treating house money differently from your own money was wrong I'd use the example of two people who entered the casino with different amounts of money but now have the same amount (somewhere in between where they each started). Then one is betting with house money and the other isn't. But I claim that it would be rational for them to behave the same way. This is because the consequences of having a certain amount of money will be the same for both of them, no matter where that money came from.
- muro 9y ago
  Why would it be rational for them to behave the same way?
  - OscarCunningham 9y ago
    Because each of their actions have exactly the same consequences.
    - coldtea 9y ago
      So A enters the casino with $100 and B enters the casino with $50 -- he then proceeds to double them, whereas A remains steady. So, now both have $100, and B plays with just the house money. A is losing money they had put aside -- B is losing money he didn't have to begin with. E.g. A might be playing with borrowed mafia money, or his kids college fund (and risks losing them), whereas B doesn't risk going anywhere below where he was when he entered the casino. If anything, he has a chance to make his winnings even bigger (or at worse, lose them). In real life (as opposed to thought experiments treating those persons like abstract entities) the origin of those money has a story, so the A=B=100 state is not all that matters to determine the consequences.
      - OscarCunningham 9y ago
        Sure. By altering external factors we can make the agents do whatever we want. Perhaps the fact that B only brought $50 indicates his frugal nature, and suggests that he also has a better financial situation outside the casino.
        coldtea 9y ago
        >Sure. By altering external factors we can make the agents do whatever we want. You say it as it's some kind of cheating -- instead of enriching the in vitro abstract example with real world impact, and showing why its abstract conclusions don't apply to the real world.
- tensor_rank_0 9y ago
  So Taleb says the function that controls how you spend your money is a path function and you say that it is a state function. does anyone know how this could be tested? or does anyone have any good gedankenexperiments to illustrate the difference that they would like to share?
  - OscarCunningham 9y ago
    I'm not claiming that they will make the same bets, just that it would be in their interest to do so.
    - tensor_rank_0 9y ago
      so the sunk cost fallacy is a similar case. rationally, a budget is a state function, but people tend to think of it as a path function. thanks for explaining.
- deleted 9y ago
  [deleted]
- kyteland 9y ago
  As someone that makes casino games and is an active gambler, I have to disagree with this assessment. The amount of money a person initially brings to the casino is often a function of many variables of their life outside the scope of a casino visit. I've gone to the casino with $500 (my ATM limit) alongside someone who brought $5,000 only to see us both end up with $1,000 in our respective pockets. The different variables that caused us to bring the initial sums definitely influenced our behavior once the values equalized. Income, assets, risk adverseness, etc. that all influence the initial sum still come into effect later on when the sums equalize.

by platz 9y ago

OscarCunningham 9y ago

I think I showed why his justification is wrong. But if I wanted to explain why treating house money differently from your own money was wrong I'd use the example of two people who entered the casino with different amounts of money but now have the same amount (somewhere in between where they each started). Then one is betting with house money and the other isn't. But I claim that it would be rational for them to behave the same way. This is because the consequences of having a certain amount of money will be the same for both of them, no matter where that money came from.

muro 9y ago
Why would it be rational for them to behave the same way?
- OscarCunningham 9y ago
  Because each of their actions have exactly the same consequences.
  - coldtea 9y ago
    So A enters the casino with $100 and B enters the casino with $50 -- he then proceeds to double them, whereas A remains steady. So, now both have $100, and B plays with just the house money. A is losing money they had put aside -- B is losing money he didn't have to begin with. E.g. A might be playing with borrowed mafia money, or his kids college fund (and risks losing them), whereas B doesn't risk going anywhere below where he was when he entered the casino. If anything, he has a chance to make his winnings even bigger (or at worse, lose them). In real life (as opposed to thought experiments treating those persons like abstract entities) the origin of those money has a story, so the A=B=100 state is not all that matters to determine the consequences.
    - OscarCunningham 9y ago
      Sure. By altering external factors we can make the agents do whatever we want. Perhaps the fact that B only brought $50 indicates his frugal nature, and suggests that he also has a better financial situation outside the casino.
      - coldtea 9y ago
        >Sure. By altering external factors we can make the agents do whatever we want. You say it as it's some kind of cheating -- instead of enriching the in vitro abstract example with real world impact, and showing why its abstract conclusions don't apply to the real world.
tensor_rank_0 9y ago
So Taleb says the function that controls how you spend your money is a path function and you say that it is a state function. does anyone know how this could be tested? or does anyone have any good gedankenexperiments to illustrate the difference that they would like to share?
- OscarCunningham 9y ago
  I'm not claiming that they will make the same bets, just that it would be in their interest to do so.
  - tensor_rank_0 9y ago
    so the sunk cost fallacy is a similar case. rationally, a budget is a state function, but people tend to think of it as a path function. thanks for explaining.
deleted 9y ago
[deleted]
kyteland 9y ago
As someone that makes casino games and is an active gambler, I have to disagree with this assessment. The amount of money a person initially brings to the casino is often a function of many variables of their life outside the scope of a casino visit. I've gone to the casino with $500 (my ATM limit) alongside someone who brought $5,000 only to see us both end up with $1,000 in our respective pockets. The different variables that caused us to bring the initial sums definitely influenced our behavior once the values equalized. Income, assets, risk adverseness, etc. that all influence the initial sum still come into effect later on when the sums equalize.