On Sun, 28 Jan 2024 at 13:11, Jeremy Bornstein <[email protected]> wrote:
> Oops; I knew there was something wrong with my math. If the proposal is to > pay $1 for an 80% chance of winning $2 and a 20% chance of not getting any > money back, the EV of that bet is actually $1.60. Right? > Right. EV is the sum of the expected outcomes. So 0.8*2 + 0.2*0 = 1.6 I agree that I would not accept any kind of payment for cold showers if I thought the payment would harm the payer. I think I would accept $500/day from either Jeff Bezos or or from someone roughly my financial peer. Perhaps I don't really believe in "from each according to their ability!" Hm. Other possibilities for why two people might agree to a wager is that given the same information they have come to different conclusions. (I think this is frequently the case.) But another possibility is that one or both of them may have non-objectively rational reasons for preferring one of the outcomes - this is the kind of bet I prefer to offer, in that the monetary consideration will sometimes cause the person to objectively re-evaluate the likelihood of their preference. "Putting your money where your mouth is." Finally, even given the same facts, one of the people may just be making a mistake in computing the odds. I used to enjoy looking for arbitrage opportunities in prediction markets but there's not enough money and too much friction to make it worthwhile. — Charles
-- Silklist mailing list [email protected] https://mailman.panix.com/listinfo.cgi/silklist
