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> I feel the urge to just post the wiki entry for the Kelly criterion. Apparently not that strong of an urge ;-). For those (like me) who didn't know it yet:
by dskloet 4y ago
> I feel the urge to just post the wiki entry for the Kelly criterion.
Apparently not that strong of an urge ;-).
For those (like me) who didn't know it yet: https://en.wikipedia.org/wiki/Kelly_criterion https://en.wikipedia.org/wiki/Kelly_criterion
- pid-1 4y ago> It is valid when the expected returns are known Sounds like a great way to lose money.
- moffkalast 4y agoI'm sure this is referring to the expected value in something like say, a dice throw. If the chances of winning when picking a certain number are 1/6 and the payoff is 6x the investment then the expected returns after a large mount of attempts are known and would be zero. I'm sure this is widely applicable in gambling.
- beardedetim 4y agoExactly the right term to use: Expected Value. If we have 1/6 chance of winning and each win gives us 6x, we have an EV of 0. Poker is a great game to learn to understand EV/variance.
- mcguire 4y agoI wonder what the expected value of entrepreneurship is? I rather suspect it is significantly negative, because most new businesses fail and the venture capital system means gambling with someone else's money.
- vsareto 4y agoNot to mention the rules are known in gambling, such as required minimum bets. Business has no such courtesy. The criterion is worthless if your small bets always result in failures because you need capital to get going.
- RobRivera 4y agoIf the preconditions arent met but you are sure they are, yes.