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I think like a poker player, I skimmed the article. What they seem to fail to mention is that variance is important as well. In poker you need to play at least
by mettamage 4y ago
I think like a poker player, I skimmed the article. What they seem to fail to mention is that variance is important as well. In poker you need to play at least 10000 hands in order for variance to average down a bit. 10000 hands is still very little.
So, if you have a 95% chance of going 10x that's great, but the question is: can you handle a 5% chance of having being potentially ruined for at least a decade? If not, then you cannot take the bet despite the fact that EV is super high.
Put more extremely, if I offer you a 99% chance to take make one billion dollars (legally) and a 1% chance of being killed, would you take it? I definitely wouldn't.
How about the following? I offer you an unfair coin flip advantage of 51% versus 49%, we're going to flip 1 million times, each time the bet is 1 dollar. Would you take it? I would.
The heuristic that poker teaches is: take a lot of small bets with huge upside with little to no downside. It doesn't matter how slim the chance of winning is. Slightly more nuanced (still a heuristic): the chance should be about as big as your volume of chance-taking. Say, you take 10000 chances, then the slimmest chance you can take (on average) is 1/10000.
- Raidion 4y agoCongrats, that's also thinking like a poker player. https://en.m.wikipedia.org/wiki/Kelly_criterion https://en.m.wikipedia.org/wiki/Kelly_criterion
- mettamage 4y agoI love the Kelly criterion! I should reread it in order to see if I can make a better heuristic on optimal bet-sizing.
- schmorptron 4y agoThis is off-topic, but the mobile wikipedia link you posted is surprisingly nice to read on desktop. Seems a lot more pleasant than the wide lines on the desktop site.
- layer8 4y agoThis comment comes up repeatedly on HN. While I somewhat agree, I would also suggest to not maximize your browser window by default, to avoid wide lines. I usually have my browser window square-ish.
- bbarn 4y ago> How about the following? I offer you an unfair coin flip advantage of 51% versus 49% Isn't that just baccarat without ties?
- mettamage 4y agoI wouldn't know, I don't know many casino games.
- bulbosaur123 4y ago> Put more extremely, if I offer you a 99% chance to take make one billion dollars (legally) and a 1% chance of being killed, would you take it? I definitely wouldn't. I would even if it offered 50+% of getting killed. The small chance you strike a billion is worth the risk.
- stavros 4y agoHow much money would the gain have to be for it to not be worth a 50% chance of getting killed?
- ozim 4y agoI don't think that would make a difference for me if someone offers more money when my life situation is kind of nice. What would make a difference would be my life situation - if it would be worse or totally shitty I could take even 25% for a billion. That was kind of theme of "Squid Games".
- WJW 4y agoSure but at some point the money gets too low to risk it even if you are in the dumps, no? Would you take 1 million for 50%? 10k for 50%? 10 bucks for 1%? 1 dollar for 1%? At some point it goes from a life changing amount of money to just "meh" money.
- ricardobeat 4y agoI would guess the uptake will fall sharply somewhere around 10 million, which is still a life-changing amount of money for 99% of the population.
- stavros 4y agoHuh, it's very odd to me that you'd take an even chance of dying to win $10m... My amount would be much, much higher, potentially infinite.
- CPLX 4y ago> if I offer you a 99% chance to take make one billion dollars (legally) and a 1% chance of being killed, would you take it? I'd take it in a heartbeat. I've done things that have a 1% chance of death just to have a good story to tell.
- tipsytoad 4y agoI actually wrote a post about this, using a metric for expected outcomes instead of ev probability https://tompollak.me/blog/ev-v-eg/ https://tompollak.me/blog/ev-v-eg/