I've been thinking about this possibly a little too much, but does 1 dollar always equal 1 dollar?

Here's a made up story to illustrate an ill conceived point. Whatever side of the brain it is that you use when you make a punt will be used when contemplating this.
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Picture this: you're sitting at home one Sunday, bored, watching telly (probably sport - regretting that you don't have money on the team coming first) and you hear a knock at the door. Who could that be, you think.

"Hi there" the man at the door says when you open it. "I would like to offer you an offer you can't refuse".

"Okay then," you say.

The man continues: "I have a coin. I'll toss it high in the air and you call. We'll have a wager. If you win I'll give you DOUBLE the amount you wagerd. If you lose then you give me the wagerd amount. How does that sound?"

"Arrr, better than average?" you suggest.

The man clicks his fingers in front of your face and suddenly you hear a loud explosion as the universe splits in 2, creating parrelell universes and lots of smoke. The events in each universe are slightly different.


UNIVERSE 1:
The smoke clears...

"Let's play for $10" says the man. "If I win you give me $10 - If you win I'll give you $20. Are you in?"

"Yes" you say.

The man tosses a coin... you call: "Heads!", or maybe "Tails!"... the coin goes high in the air... it lands... bounces once... twice... comes to rest... you inspect the coin... and the result is...

Well, it doesn't matter what the result is. The point is: you calculated the odds; deemed them generous; and made the bet.

Meanwhile...


UNERVERSE 2:
The smoke clears...

"Let's play for everything" says the man. "If I win you give me all your money, your car, your furniture, your house, everything. If you win I'll give you 2 houses, 2 cars and twice the value of everything you currently own. Are you in?"

The odds are good. But are you in?

Universe 1: yes. "heads"

Universe 2: no thanks, marlon

At this point I would like to make it absolutely clear that moeee and Mofo are not the same person,although there is a lot of wisdom in both persons remarks regarding the Laws of the Universe.
Bit like a question I asked of an aquaintance of mine.

There is a bucket containing 1 million white marbles and one black marble.
If it was said that you can have your firstborn son set up financially for life against giving him away to a rich childless couple,would you take a blindfolded dip into the bucket?

He said no.Is anyone here surprised?

It's the large obvious losses that people avoid.

UNIVERSE 3:
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We will keep flipping until you say stop.

"Heads, pay me $10. Tails nothing, two tails in a row - I pay you $30"

Now what do you do?

Mofo, the reason you don't bet it all is because you would simply be overbetting your edge.

No matter what your advantage, there is no way kelly would recommend betting 100%. The advantage is huge (50%), but the risk is even greater.

If someone came to me with a proposition like that, I'd assume the game was rigged.

"Mofo, the reason you don't bet it all is because you would simply be overbetting your edge."

Mr J, this sounds good. By "edge" I assume you mean: the ammount you are prepared to lose. Is this correct or is there a better definition?

What I'd really like to do is mathematically calculate my edge for every bet.

Oh, and who's kelly?

Here comes stickynose Mo to put his 2 bobs worth.
An edge is an advantage.
Kelly developed a system of investing your money to take advantage of this edge.
The system has a flaw in that you can wipe out your complete bank in one foul intervention of God.
The best system is the KISS system.
Keep It Simple Stupid.
Just warming Mofo up until you arrive Mr J.
We'll get that -26% trimmed,Mofo.Don't you worry about that.
Look at Sportznut.Bets on anything that moves.And some that don't.Even he can help.Because amongst all our faults,we like to share knowledge.
Some times we live our lives following what we believe to be true,and can't understand why we keep falling over.
Keep the questions rolling in.
Again,just keeping 'em amused till you arrive Mr J.

Well you saw me coming :wink:

Moe is sort of right there.

Kelly is about maximising growth. Finding the sweet spot in between risk and advantage. You will never go bust in THEORY. However, in sports you deal with uncertainties, i.e. you never know your exact advantage in a bet. This means it is possible to overbet, which in turn will cause you to lose all of your money.

Hmmmmmm....

...VERY interesting.

I don't think my -26% will improve this weekend moe. I've got $40 on the Lotto. Believe it or not I consider myself an extreemly logical person.

So why do 2 logical people use the same information to come to 2 completely different conclusions? It happens all the time. I think it has to do with perspective. Different objectives, outlooks and values and what-have-you.

In the "multiple universe" example, the 2 most logical people in the world will likely come up with a different answer if The Guy with the coin asked: "How much would you like to gamble?". Agree?

Well, I must go now - I have no computer over the weekend so...


to be continued...

3 men book into a $30 hotel room.Each man pays $10.
The hotel manager realizes he has made a mistake and the hotel room is only $25.
So he gives the bellboy $ 5 to return to the men .
The bellboy thinks to himself .5 divided by 3 wont go so I will pocket $2 and give them $1 each back.
So the 3 men have now effectively paid $9 each.
3 by 9 equals $27. $2 in the bellboys pocket = $29 .
WHERE HAS THE OTHER $1 gone.

Cheers.
darky