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I don't think this is true. Most people will not be bankrupt after losing a dollar. If this is true then Steve failed badly at communicating this context. To b

I don't think this is true. Most people will not be bankrupt after losing a dollar. If this is true then Steve failed badly at communicating this context. To be honest, I think Steve just didn't grasp the mathematical deepness of the problem.

nighthawk454 2y ago
I think you've misread. The bankruptcy was in an analogy to poker. The point is if you get _one round_ to play - essentially all or nothing - should you play? No.
- cuu508 2y ago
  OK, if you value survival, at what odds should you play?
  - djtango 2y ago
    I actually think parkour community and practice teach and handle this very well. Same for free solo climbing. Imagine you're in your bathroom, choose two tiles and step from A to B. No problem. What if those tiles were all you had to stand on and you were 30 storeys up suddenly it's a whole different equation and your body instinctively knows it. In fact some of parkour training is learning to master your own fear and confidently execute things you know you can already do in the face of higher stakes. If I offered you a dice roll and said guess the number, bet 1 dollar I'll pay you 12 on the right guess you'd bet 1 dollar but you wouldn't bet your life on it even though the EV was high. Even if the payout was 1 million you still might not take it (some might) Edit Thinking about it more, my example is more about factoring in all the risks - a positive EV bet with a large downside risk is not a great one to take even if the risks are small which is where the picking up pennies in front of a steamroller analogy comes from
    - nighthawk454 2y ago
      Yeah, exactly - you wouldn't stake your life on hitting the average case in an n=1 scenario. Parkour community sounds really cool!
      - cuu508 2y ago
        You are staking $1.
  - nighthawk454 2y ago
    It's a good question, sort of related to optimal bet sizing. Check out this wiki which another commenter also mentioned: https://en.wikipedia.org/wiki/Kelly_criterion?useskin=vector https://en.wikipedia.org/wiki/Kelly_criterion?useskin=vector
- gwd 2y ago
  > The point is if you get _one round_ to play - essentially all or nothing - should you play? No. On the contrary, in general yes you should, because life as a whole will give you a variety of these sorts of risks. Steve Balmer's offer is just one episode in a lifelong series of risks offered you by the universe at large.
  - denizener 2y ago
    It all depends too if the absorbing barrier is a true absorbing barrier like death. Bankruptcy would suck but it is not like you have no possibility of another chance like death. I suspect there is much muddled thinking in this area viewing the death of a LLC as equal to the death of a human. A coin flip for 20 million dollars if tails, physical death if heads is much different than bankruptcy if heads. One is a stupid gambler with their life and the other is basically a serial entrepreneur taking asymmetrical bets until the coin comes up tails.
fortydegrees 2y ago
While it does seem that Ballmer doesn't have an understanding of the deepness of the problem, in his defence, he outscored BillG on the math SAT with a perfect score of 800, and graduated Harvard with a degree in applied mathematics. Which makes me wonder if it's related to another 'simple' game theory problem that came up in Matt Levine's money stuff: "They made me do the math on 1000 coin flips. EV(heads) (easy), standard deviation (slightly harder), then they offered me a +EV bet on the outcome. I said “let’s go.” They said “Wrong. If we’re offering it to you, you shouldn’t take it.” I said “We just did the math.” They said “We have a guy on the floor of the Amex who can flip 55% heads.”" I like that anecdote and the takeaway, especially with regards to trading: if someone's offering you what seems obviously a +EV trade, why are they offering it to you and what are you missing? Whether that was Ballmer's intended lesson is another matter.. [0]https://www.bloomberg.com/opinion/articles/2024-05-14/amc-is-back-too https://www.bloomberg.com/opinion/articles/2024-05-14/amc-is...
- eesmith 2y ago
  You know that even smart mathematicians got tripped up by the Monty Hall problem, right? > Even when given explanations, simulations, and formal mathematical proofs, many people still did not accept that switching is the best strategy.[5] Paul Erdős, one of the most prolific mathematicians in history, remained unconvinced until he was shown a computer simulation demonstrating Savant's predicted result.
- lucianbr 2y ago
  Is the interview for an engineering position or for sales? If you're hiring a software developer, I am going to assume all probabilities are about physical processes or data distributions or such, and there is no "if we're asking it means we have something up our sleeve". The data going to be sorted by merge sort is not going to have anything up its sleeve, or set any traps for me.
  - rini17 2y ago
    Physical processes are very often long tailed on the wrong end and thus adversarial though.

nighthawk454 2y ago

I think you've misread. The bankruptcy was in an analogy to poker. The point is if you get _one round_ to play - essentially all or nothing - should you play? No.

cuu508 2y ago
OK, if you value survival, at what odds should you play?
- djtango 2y ago
  I actually think parkour community and practice teach and handle this very well. Same for free solo climbing. Imagine you're in your bathroom, choose two tiles and step from A to B. No problem. What if those tiles were all you had to stand on and you were 30 storeys up suddenly it's a whole different equation and your body instinctively knows it. In fact some of parkour training is learning to master your own fear and confidently execute things you know you can already do in the face of higher stakes. If I offered you a dice roll and said guess the number, bet 1 dollar I'll pay you 12 on the right guess you'd bet 1 dollar but you wouldn't bet your life on it even though the EV was high. Even if the payout was 1 million you still might not take it (some might) Edit Thinking about it more, my example is more about factoring in all the risks - a positive EV bet with a large downside risk is not a great one to take even if the risks are small which is where the picking up pennies in front of a steamroller analogy comes from
  - nighthawk454 2y ago
    Yeah, exactly - you wouldn't stake your life on hitting the average case in an n=1 scenario. Parkour community sounds really cool!
    - cuu508 2y ago
      You are staking $1.
- nighthawk454 2y ago
  It's a good question, sort of related to optimal bet sizing. Check out this wiki which another commenter also mentioned: https://en.wikipedia.org/wiki/Kelly_criterion?useskin=vector https://en.wikipedia.org/wiki/Kelly_criterion?useskin=vector
gwd 2y ago
> The point is if you get _one round_ to play - essentially all or nothing - should you play? No. On the contrary, in general yes you should, because life as a whole will give you a variety of these sorts of risks. Steve Balmer's offer is just one episode in a lifelong series of risks offered you by the universe at large.
- denizener 2y ago
  It all depends too if the absorbing barrier is a true absorbing barrier like death. Bankruptcy would suck but it is not like you have no possibility of another chance like death. I suspect there is much muddled thinking in this area viewing the death of a LLC as equal to the death of a human. A coin flip for 20 million dollars if tails, physical death if heads is much different than bankruptcy if heads. One is a stupid gambler with their life and the other is basically a serial entrepreneur taking asymmetrical bets until the coin comes up tails.

fortydegrees 2y ago

While it does seem that Ballmer doesn't have an understanding of the deepness of the problem, in his defence, he outscored BillG on the math SAT with a perfect score of 800, and graduated Harvard with a degree in applied mathematics. Which makes me wonder if it's related to another 'simple' game theory problem that came up in Matt Levine's money stuff: "They made me do the math on 1000 coin flips. EV(heads) (easy), standard deviation (slightly harder), then they offered me a +EV bet on the outcome. I said “let’s go.” They said “Wrong. If we’re offering it to you, you shouldn’t take it.” I said “We just did the math.” They said “We have a guy on the floor of the Amex who can flip 55% heads.”" I like that anecdote and the takeaway, especially with regards to trading: if someone's offering you what seems obviously a +EV trade, why are they offering it to you and what are you missing? Whether that was Ballmer's intended lesson is another matter.. [0]https://www.bloomberg.com/opinion/articles/2024-05-14/amc-is-back-too https://www.bloomberg.com/opinion/articles/2024-05-14/amc-is...

eesmith 2y ago
You know that even smart mathematicians got tripped up by the Monty Hall problem, right? > Even when given explanations, simulations, and formal mathematical proofs, many people still did not accept that switching is the best strategy.[5] Paul Erdős, one of the most prolific mathematicians in history, remained unconvinced until he was shown a computer simulation demonstrating Savant's predicted result.
lucianbr 2y ago
Is the interview for an engineering position or for sales? If you're hiring a software developer, I am going to assume all probabilities are about physical processes or data distributions or such, and there is no "if we're asking it means we have something up our sleeve". The data going to be sorted by merge sort is not going to have anything up its sleeve, or set any traps for me.
- rini17 2y ago
  Physical processes are very often long tailed on the wrong end and thus adversarial though.