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The collective also gains in round 2, and each subsequent round. From the intuition that you have about the first round, treat each group with the same amount o
by pclmulqdq 3y ago
The collective also gains in round 2, and each subsequent round. From the intuition that you have about the first round, treat each group with the same amount of money separately, and you will see that money grows in every round. Example:
Round 1:
100x$100 (total $10000) -> 50x$60 + 50x$150 (total $10500)
Gain of $500 total
Round 2:
50x$60 ($3000) -> 25x$90 + 25x$36 ($3150)
50x$150 ($7500) -> 25x$225 + 25x$90 ($7875)
Gain of $150+$375=$575.
Round 3:
25x$36 ($900) -> half $54 and half $21.60 ($945 total)
And so on.
Each round, the collective wealth goes up 5%, no matter how many rounds you run.
- selcuka 3y agoNo, it will approach zero like the individual one. Think of it this way: If everyone's individual wealth approaches zero, why would the total go up? Just run the following simulation in a python REPL: import random POPULATION = 100 INITIAL_MONEY = 1000 ROUNDS = 10000 wallets = [INITIAL_MONEY for _ in range(POPULATION)] for iteration in range(ROUNDS): for person in range(POPULATION): if random.random() > 0.5: wallets[person] = wallets[person] * 1.5 else: wallets[person] = wallets[person] * 0.6 print(f"{sum(wallets)=}")
- jstanley 3y agoTry it with a larger population and a smaller number of rounds. It turns out the mean gain actually is positive, but the median gain is negative.
- nhinck 3y agoThe claim was: "Each round, the collective wealth goes up 5%, no matter how many rounds you run. " And this isn't true.
- kgwgk 3y agoDo you mean that it's not true that "in one round, the collective wealth goes up 5%"? I could agree with that. (However, if you add "in expectation" it will be true for one round and for each round no matter how many rounds you run.)
- nhinck 3y agoFor a finite population and starting wealth, the collective wealth will tend to 0 given enough rounds.
- kgwgk 3y agoSo you say that it's false that "in one round, the collective wealth goes up 5%", right? However you agree that it's true that "in one round, the collective wealth goes up 5% in expectation", right? (I agree that "for a finite population and starting wealth, the collective wealth will tend to 0 given enough rounds ALMOST SURELY". The last bit is important though. Otherwise it's like saying that if you flip a coin enough times you will get heads - which is not exactly true.)
- nhinck 3y agoYeah I would say "in one round, the collective wealth goes up 5% in expectation" but "for a finite population and starting wealth, the collective wealth will tend to 0 given enough rounds" not almost, but absolutely.
- kgwgk 3y agoMaybe you're not aware but almost surely is a technical term - which makes the statement correct. Just like you cannot be absolutely certain to get heads if you flip a coin enough times even though it will happen almost surely.
- kybernetikos 3y agoI think that the effect is from the fact that you're sampling from all possible outcome history paths. To realise the positive expected value, your sample needs to include some of the increasingly rare possibilities where you gain enormously. This means that if your population is large compared to the number of branches (2^rounds) then you probably do sample that and the overall gain is positive. If your number of branches is large compared to your population, you probably don't sample the branches where you make lots of money, and your overall gain is negative.
- pclmulqdq 3y agoThe total goes up because not everyone loses wealth at each round. Wealth just gets more concentrated in the hands of the people who win the most. Also, "5% per round" assumes an infinite number of people. If you run this with 100 people, by the 3rd round, the expected group sizes are non-integers, so you will diverge from the "infinite people" case.