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The most famous example I'm aware of is when Warren Buffet insured the "Billion Dollar Bracket" challenge for QuickBooks, which would pay off if someone had a p
by HWR_14 5y ago
The most famous example I'm aware of is when Warren Buffet insured the "Billion Dollar Bracket" challenge for QuickBooks, which would pay off if someone had a perfect NCAA bracket. That's 63 correct binary choices, so the odds that anyone gets it are incredibly low.
Of course, they were using his fame to help sell the challenge, but I wondered what premium he got.
- Sanzig 5y agoNaively going by expected value, 1e9/2^63 gives about $0.12 per participant as a reasonable starting point. But it is a weird one: the risk is really small but the required payout is massive.
- HWR_14 5y agoA 50-50 result for every sporting event is an absurd assumption. For instance, 4 of those 63 are 1-16 matches of which I think one or two in history have gone the 16's way. I'm guessing they needed to estimate the number of participants, but I don't know that either.
- deleted 5y ago[deleted]
- deleted 5y ago[deleted]
- isolli 5y agoFrom what I remember, Buffet stated that the main risk for him was of someone somehow hacking the system and changing their bet after the fact. All without being detected, of course.