6 ms·

As a mathetmatician how can you ever justify participating in a lottery where there is a possibility of no-winners or shared winners. It just destroys any hope

by Jommi 6y ago

As a mathetmatician how can you ever justify participating in a lottery where there is a possibility of no-winners or shared winners. It just destroys any hope of any positive EV.

fragmede 6y ago
EV isn't always negative! https://www.theatlantic.com/business/archive/2016/02/how-mit-students-gamed-the-lottery/470349/ https://www.theatlantic.com/business/archive/2016/02/how-mit...
zomglings 6y ago
The point is that my personal happiness level does not only depend on positive expected gain in capital. I gain happiness also from the miniscule hope of the life-altering outcome of winning the lottery. That gain in happiness is occasionally worth the price of a lottery ticket.
- Jommi 6y ago
  Interesting to hear. This is something similar I do with some betting/stock buying I do. But the odds are on a completely different level of impossibility in lottery that I just cant really get your end of the argument :/
  - zomglings 6y ago
    Fair enough - I think it's a subjective thing and also depends on your current financial circumstances. I'm a starving startup founder, so the hope represents a real escape from my current financial circumstances. If I were poorer, I suspect the happiness I gained from the lottery ticket purchases would be even greater. If I already owned a home, on the other hand, I would value the lottery ticket hopes much lower.
    - tudorconstantin 6y ago
      I totally understand you! I'm a software engineer since 2006 and even though I followed a classical career (in Eastern Europe), we (me, my wife and our daughter) were struggling financially for the first approx 9 years. Buying a lottery ticket from time to te, when the prize was big, made us live in a fantasy world between the time we bought it and when te results were announced. I think this thing - imagining a life without financial worries, lavish vacations and expensive toys, motivated me to learn more, try to launch a few startups and sacrifice my free time in order to try and achieve greatness. Were those money well spent? Definitely yes (even though I haven't actually won the lottery)
  - zippy5 6y ago
    The value is in the hope it creates. As a statistician, a lottery seem hopeless. To everyone else, it's about feeling that something impossible becomes possible. Tbh lottery tickets can be a pretty cheap form of hope relative to other forms of gambling. Take a look at some of RobinHood's customers who are ”investing”. The odds seemed so favorable until they realized 95% of traders lose their money.
    - mD5pPxMcS6fVWKE 6y ago
      But people routinely buy insurance, and it's considered a right and moral thing to do. Though the math is exactly the same as with the lottery. Statistically, odds are unfavorable. But it buys peace of mind, so people pay.
      - schoen 6y ago
        The insurance is given a polarity and connection to the rest of your luck in such a way that it smooths out your risks. On the other hand, playing the lottery makes your good luck spikier. (Though there are more specific ways to say it, we could say that insurance is meant to make your life less impacted by chance -- more predictable -- while insurance is meant to make it more impacted by chance -- more unpredictable.)
        schoen 6y ago
        (whoops, I mean "while the lottery is meant to make it more impacted by chance")
- adammoelis 6y ago
  Exactly. People try to maximize expected utility in life, not expected value.
- rapnie 6y ago
  Yes, I know the feeling from the times I bought a ticket myself, against rationality. I'm not an expert, but seems to me this feeling is also the main driver leading to gambling addiction, which ultimately leads to addicts saying things like "It's not about the money, but the game itself", after having lost a ton of money. Wonder if Yotta can lead to the same addiction, and if so if it is then solely applied for positive objectives (i.e. saving money), or lowers the barrier to entry for other gambling schemes that are less beneficial.
  - adammoelis 6y ago
    We definitely don't want people to start gambling. We hope that the riskless unlocking of upside that we provide shines through as a better option than risking money for upside, even if our overall upside is lower on an absolute basis.
groby_b 6y ago
Life is not all about EV. Especially not monetary EV. I own my home. It's an objectively bad investment (my tech stocks sure appreciated more than a home I bought in 2008 before the crash :) But I like the feeling that comes with owning a home. I go out for dinner. (Well, used to). It's objectively a waste of time and money, but I still like the feeling that comes with it. I play guitar. There's no EV attached to it (in fact, people might pay me to stop ;) but there's still an emotional payoff. The same goes for the lottery. For some people, there's entertainment value in it, despite understanding the mathematics of it. If you've ever played poker for money - unless you're exceptionally good, you paid money to sit around a table in a smoky room. EV is negative, emotional experience is a lot of fun. (Yeah, poker isn't entirely chance, but I promise that unless you're pretty good at it and spent a lot of time learning, it's pretty much equivalent)
- fragmede 6y ago
  We don't rigorously define a numeric EV on most things in life, but we do assign some notion of fairness. You go out for dinner, but going out for dinner comes with expectations, even if the monetary EV is < 1. Basically that the food won't kill you. Similarly there are certain expectations on the lottery on the practicality of winning - everyone knows the odds are against you, but there's still an expectation that a lucky enough someone can win. A lottery that doesn't have a winner sounds rotten and I don't think you'd eat rotten food from a restaurant, no matter how much you accept that inherent EV of the transaction is negative. There are many, many more words that can and have been written about the psychology of lotteries, but suffice to say, for many lottery players, it's not as simple as "I know that the EV < 1, I'm just playing for the entertainment value".
mD5pPxMcS6fVWKE 6y ago
For example, in some cases (I won't specify for the fear of being cancelled) your chance of becoming rich by your skills is exactly zero, and you know it. Chance of winning the lottery is small, but higher than zero.

by Jommi 6y ago

As a mathetmatician how can you ever justify participating in a lottery where there is a possibility of no-winners or shared winners. It just destroys any hope of any positive EV.

fragmede 6y ago

EV isn't always negative! https://www.theatlantic.com/business/archive/2016/02/how-mit-students-gamed-the-lottery/470349/ https://www.theatlantic.com/business/archive/2016/02/how-mit...

zomglings 6y ago

The point is that my personal happiness level does not only depend on positive expected gain in capital. I gain happiness also from the miniscule hope of the life-altering outcome of winning the lottery. That gain in happiness is occasionally worth the price of a lottery ticket.

Jommi 6y ago
Interesting to hear. This is something similar I do with some betting/stock buying I do. But the odds are on a completely different level of impossibility in lottery that I just cant really get your end of the argument :/
- zomglings 6y ago
  Fair enough - I think it's a subjective thing and also depends on your current financial circumstances. I'm a starving startup founder, so the hope represents a real escape from my current financial circumstances. If I were poorer, I suspect the happiness I gained from the lottery ticket purchases would be even greater. If I already owned a home, on the other hand, I would value the lottery ticket hopes much lower.
  - tudorconstantin 6y ago
    I totally understand you! I'm a software engineer since 2006 and even though I followed a classical career (in Eastern Europe), we (me, my wife and our daughter) were struggling financially for the first approx 9 years. Buying a lottery ticket from time to te, when the prize was big, made us live in a fantasy world between the time we bought it and when te results were announced. I think this thing - imagining a life without financial worries, lavish vacations and expensive toys, motivated me to learn more, try to launch a few startups and sacrifice my free time in order to try and achieve greatness. Were those money well spent? Definitely yes (even though I haven't actually won the lottery)
- zippy5 6y ago
  The value is in the hope it creates. As a statistician, a lottery seem hopeless. To everyone else, it's about feeling that something impossible becomes possible. Tbh lottery tickets can be a pretty cheap form of hope relative to other forms of gambling. Take a look at some of RobinHood's customers who are ”investing”. The odds seemed so favorable until they realized 95% of traders lose their money.
  - mD5pPxMcS6fVWKE 6y ago
    But people routinely buy insurance, and it's considered a right and moral thing to do. Though the math is exactly the same as with the lottery. Statistically, odds are unfavorable. But it buys peace of mind, so people pay.
    - schoen 6y ago
      The insurance is given a polarity and connection to the rest of your luck in such a way that it smooths out your risks. On the other hand, playing the lottery makes your good luck spikier. (Though there are more specific ways to say it, we could say that insurance is meant to make your life less impacted by chance -- more predictable -- while insurance is meant to make it more impacted by chance -- more unpredictable.)
      - schoen 6y ago
        (whoops, I mean "while the lottery is meant to make it more impacted by chance")
adammoelis 6y ago
Exactly. People try to maximize expected utility in life, not expected value.
rapnie 6y ago
Yes, I know the feeling from the times I bought a ticket myself, against rationality. I'm not an expert, but seems to me this feeling is also the main driver leading to gambling addiction, which ultimately leads to addicts saying things like "It's not about the money, but the game itself", after having lost a ton of money. Wonder if Yotta can lead to the same addiction, and if so if it is then solely applied for positive objectives (i.e. saving money), or lowers the barrier to entry for other gambling schemes that are less beneficial.
- adammoelis 6y ago
  We definitely don't want people to start gambling. We hope that the riskless unlocking of upside that we provide shines through as a better option than risking money for upside, even if our overall upside is lower on an absolute basis.

groby_b 6y ago

Life is not all about EV. Especially not monetary EV. I own my home. It's an objectively bad investment (my tech stocks sure appreciated more than a home I bought in 2008 before the crash :) But I like the feeling that comes with owning a home. I go out for dinner. (Well, used to). It's objectively a waste of time and money, but I still like the feeling that comes with it. I play guitar. There's no EV attached to it (in fact, people might pay me to stop ;) but there's still an emotional payoff. The same goes for the lottery. For some people, there's entertainment value in it, despite understanding the mathematics of it. If you've ever played poker for money - unless you're exceptionally good, you paid money to sit around a table in a smoky room. EV is negative, emotional experience is a lot of fun. (Yeah, poker isn't entirely chance, but I promise that unless you're pretty good at it and spent a lot of time learning, it's pretty much equivalent)

fragmede 6y ago
We don't rigorously define a numeric EV on most things in life, but we do assign some notion of fairness. You go out for dinner, but going out for dinner comes with expectations, even if the monetary EV is < 1. Basically that the food won't kill you. Similarly there are certain expectations on the lottery on the practicality of winning - everyone knows the odds are against you, but there's still an expectation that a lucky enough someone can win. A lottery that doesn't have a winner sounds rotten and I don't think you'd eat rotten food from a restaurant, no matter how much you accept that inherent EV of the transaction is negative. There are many, many more words that can and have been written about the psychology of lotteries, but suffice to say, for many lottery players, it's not as simple as "I know that the EV < 1, I'm just playing for the entertainment value".

mD5pPxMcS6fVWKE 6y ago

For example, in some cases (I won't specify for the fear of being cancelled) your chance of becoming rich by your skills is exactly zero, and you know it. Chance of winning the lottery is small, but higher than zero.