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Let me explain this another way, since you seem to be thinking about this the way I originally thought about it. If you wager 500 million to win 1 billion, the
by mateo411 4y ago
Let me explain this another way, since you seem to be thinking about this the way I originally thought about it.
If you wager 500 million to win 1 billion, then that be pays 2 to 1. Any 2 to 1 wager makes sense when the odds of winning is greater than 1/3.
If the odds are 50/50 or 1/2, then betting the amount to win the same amount is an EV neutral move.
You are correct that the marginal utility of money is pretty weird when you are billionaire.
- toast0 4y agoYou're saying you'll give me $1 with a 50/50 chance I give you the dollar back or keep it? I'm happy to meet and explore this in person ;) As described in the OP, you're not wagering the bid, you're paying the bid. I was not expecting a return of the bid if you win. The EV changes if you get your wager back.
- mateo411 4y agoNo, I'm saying I bet $1 and I have possibility to win $1, so I end up with $2. I see, if you frame it in terms of a bid that you don't get back, then your reasoning is correct.