Author Topic: Phenomenal math article  (Read 4347 times)

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mr j

Phenomenal math article
« on: July 15, 2016, 12:00:14 AM »
What have you learned about the mistakes that people often make when trying to predict the outcome of games? For example, in the section in the book on horse racing, you mention that people often gamble too much on underdogs. Are there other common errors?

There’s a number of biases we fall into. One is the “favorite-long-shot bias.” In horse racing, if you look at the horses that are in the back of the pack, they have higher odds than their performance suggests they should. In other words, people overestimate the chance of long shots winning. That feature also pops up in other sports, and even in how we predict weather or severe political events. People tend to focus on things that are surprising and overestimate the chances of unlikely events.
Another is known as the Monte Carlo fallacy. This originated in roulette, where when the same color comes up multiple times, people tend to start piling money on the other color. They think that if black has come up a lot, then red must be due. Of course, it isn’t, because the result is still completely random, but there’s this psychological bias dragging us one way.
A third psychological quirk which pops up a lot in games is what’s known as gambler’s ruin. This is the tendency where if people win at a game, they increase the amount of money they’re risking. But often when people lose, they don’t decrease the amount that they’re risking. Mathematically, this will always lead you to bankruptcy. This is why bankroll management is incredibly important, because you need to resist this temptation and adjust the amount you’re risking depending on where you are in the game.
https://www.washingtonpost.com/news/wonk/wp/2016/07/13/the-scientific-way-to-win-in-vegas/
« Last Edit: July 15, 2016, 12:28:19 AM by kav »

Trilobite

Re: Phenomenal math article
« Reply #1 on: July 15, 2016, 09:48:35 AM »
a useless post and a useless link, imo.

« Last Edit: July 15, 2016, 09:59:09 AM by Trilobite »

kav

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Re: Phenomenal math article
« Reply #2 on: July 15, 2016, 10:24:57 AM »
Thanks for posting Ken, but to tell you the truth I didn't find the article very insightful.
As for the “favorite-long-shot bias”, Taleb has shown that the reverse is actually true. People tend to underestimate (even ignore) very long shots. And this tendency is especially risky for the financial system.
« Last Edit: July 15, 2016, 10:40:52 AM by kav »

mr j

Re: Phenomenal math article
« Reply #3 on: July 15, 2016, 07:28:49 PM »
I thought it was great to be honest. I even printed it out and its hanging on my wall (lol).

I have said it many times (some dont like to hear it). LISTEN TO THE PEOPLE THAT KNOW MORE or who at least can help you out a bit. I would not trade this author for 40 other board members, no damn way. People have such strong ego's, they refuse to learn from others.

Not me....Real (General) has taught me a ton. I am open to LEARNING from the guys I have argued with for years.

If you know more than me, I'm ALL EARS !!!!!!!!!!!!!!!!

Ken
« Last Edit: July 15, 2016, 09:08:22 PM by kav »

random

Re: Phenomenal math article
« Reply #4 on: July 15, 2016, 08:20:53 PM »
Maybe we know other things.

mr j

Re: Phenomenal math article
« Reply #5 on: July 15, 2016, 08:43:06 PM »
Maybe we know other things.

Who is we? On this board? I'm not joking, serious question.

Ken

random

Re: Phenomenal math article
« Reply #6 on: July 15, 2016, 10:19:48 PM »
So you mean that at this board no one knows things different from the things you know?
Yes or no?

Best Regards

mr j

Re: Phenomenal math article
« Reply #7 on: July 15, 2016, 10:32:40 PM »
uuuuuuum, I just asked, do you mean this board? Thats my question.

Ken

mr j

Re: Phenomenal math article
« Reply #8 on: July 15, 2016, 10:34:37 PM »
So you mean that at this board no one knows things different from the things you know?
Yes or no?

Best Regards

Thats a big YES. No need to even think hard about it. I thought you meant ALL roulette boards.

Ken

random

Re: Phenomenal math article
« Reply #9 on: July 15, 2016, 10:42:28 PM »

I know something you don't. But it's ok. no sweat. I feel happy inside just because if god knows that something it is proof of his existence.

Keep cool.
« Last Edit: July 16, 2016, 02:46:59 PM by kav »

mr j

Re: Phenomenal math article
« Reply #10 on: July 15, 2016, 10:53:06 PM »
If you have the talent, flaunt it. I do.

Ken

random

Re: Phenomenal math article
« Reply #11 on: July 15, 2016, 10:58:06 PM »
Quote
flaunt[/color]: to show or make obvious something you are proud of in order to get admiration.

I like your style. You look like Bruce Willis.

mr j

Re: Phenomenal math article
« Reply #12 on: July 15, 2016, 11:11:50 PM »
I'm in a GREAT mood random!!!

Enjoy life.

Ken

scepticus

Re: Phenomenal math article
« Reply #13 on: July 16, 2016, 04:13:10 AM »
Thanks for posting Ken, but to tell you the truth I didn't find the article very insightful.
As for the “favorite-long-shot bias”, Taleb has shown that the reverse is actually true. People tend to underestimate (even ignore) very long shots. And this tendency is especially risky for the financial system.

I think Taleb was referring to the financial markets, kav.
In financial markets you can buy Forwards or Futures which depend on a longish  term and are usually bought for Hedging purposes .In Horse Racing  betting  your bet is usually on the Here and Now.
I remember reading a study of horse races  in  America where it was  found that there was evidence of the Fav.- Long Shot bias.  In the U.K. it has been found that favourites above 3/1 have only a  1 in 10 record of wins -  and 3/1 is hardly a Long Shot !

Bayes

Re: Phenomenal math article
« Reply #14 on: July 16, 2016, 11:12:07 AM »
Worth a read. I like this paragraph-

Quote
A third psychological quirk which pops up a lot in games is what’s known as gambler’s ruin. This is the tendency where if people win at a game, they increase the amount of money they’re risking. But often when people lose, they don’t decrease the amount that they’re risking. Mathematically, this will always lead you to bankruptcy. This is why bankroll management is incredibly important, because you need to resist this temptation and adjust the amount you’re risking depending on where you are in the game.

That's the key to success, IMO.