3 ms·
You mean the expected payout is -$5, right? Otherwise the rational person with decent means -- even with a very concave utility -- would pay near $5 for that ti
by kqr 3y ago
You mean the expected payout is -$5, right? Otherwise the rational person with decent means -- even with a very concave utility -- would pay near $5 for that ticket, and this would be a Kelly-correct investment.
The discussion was specifically about negative-EV lotteries since those are the ones that require convex utility.
- aleph_minus_one 3y ago> You mean the expected payout is -$5, right? No, 5$. The reason is that you sell/auction these lottery tickets. The price that the customer pays has to be subtracted from this payout (and this way the final payout very likely will become negative). But the price that the customer will pay in this experiment is not known beforehand, so the initial payout has to be positive.
- kqr 3y agoRight, I'm dumb. Yeah, that sounds like a very exciting experiment! Now I just have to find someone to fund it...