3 ms·
Here's my favorite example -- in the form of a story. A bunch of friends visits a young guy who recently moved to Las Vegas. "Here's how we get twenty bucks i
by MilnerRoute 4y ago
Here's my favorite example -- in the form of a story.
A bunch of friends visits a young guy who recently moved to Las Vegas. "Here's how we get twenty bucks in Las Vegas," he boasts to his friends, putting $20 on the roulette wheel for black. When it comes up red, he puts down a $40 bet, bragging that "I'll keep increasing the size of my bet until I make back my money -- plus another $20!"
One time he'd had to double his bet four times in a row, but he's convinced that his system works, and does it every time company comes to visit.
Do you see where this is going? One day he hits a horrible streak. Five times in a row he's lost the bet. (So, $20, $40, $80, $160, $320.) Now he's got to bet another $640 -- and hope that he wins. (It's getting awkward, with all his friends watching him lose, feeling bad for him...) At some point his wallet is out of cash, and he's slinking back to the in-casino ATM machine. (And the bank balance isn't infinite either...)
Conclusion? This particular strategy has an asymmetric downside. More often than not, you'll walk away with $20. But the casino knows that sooner or later you'll have that one very bad day where they'll get it all back.
- valdagger 4y agoClassic martingale. Never fails to capture the imagination.
- fb03 4y agoI coded this strategy as a roulette simulator (to learn me some Rust). You are guaranteed to win a few but as you keep playing, your loss goes to negative infinity. https://github.com/flipbit03/roulette_simulation https://github.com/flipbit03/roulette_simulation
- myroon5 4y agoCasinos also usually have bet minimums and maximums to thwart things like this
- threeseed 4y agoThe other thing is that in Las Vegas at least casinos are private property. So if you keep winning they have the legal right to just throw you out.
- xelxebar 4y agoThis is an good point. From the perspective of a casino, most of their games have asymmetric upside.
- throwaway_4ever 4y agoCounting blackjack at casinos actually has asymmetric upside as OP words it. Most of the time, you're placing minimum bets slowly losing at -0.5% EV a hand, gaining information on the count. But when the count is high, you're making 8-10x bets at 1 - 2.5% EV and raking in so much, on average, that you come out ahead at like EV 1%.
- defrost 4y agoThis is why wearable computers were invented . . . [1] https://en.wikipedia.org/wiki/The_Eudaemonic_Pie https://en.wikipedia.org/wiki/The_Eudaemonic_Pie
- pjlegato 4y agoThis is called a "martingale" betting strategy. It's been extensively studied in probability theory. If you had infinite wealth and the casino would let you bet forever, it would work, but in real life neither of these conditions is true. https://en.wikipedia.org/wiki/Martingale_(betting_system) https://en.wikipedia.org/wiki/Martingale_(betting_system)