MIN win percentage you'd take for 50% of what you are worth

[1800GAMBLER]

So you have to gamble 50% of what you are worth on a coin flip that you chose the odds on it landing heads, what's the MIN percentage you'd take and why? i.e. it will land heads 60% would you take it or want more? What chances would you want for everything you are worth?

[stoxtrader]

this is going to be a personal question for everyone and relates to their financial position in life and ability/willingness to assume risk.

For me, I have a comfortable life with a mortgage and two kids. For me to gamble all of my worth I think I would need a 100% guarantee on success.

To gamble 50% of my worth I think I would need an 80% win rate.

As an example only, if I was worth 500k, then losing 250k would hurt me much much more than winning 250k would gain me. As my net worth increases, the marginal utility (additional enjoyment/satisfaction) I get out of each additional dollar decreases.

stox.

[Doctaprofit]

i dont think marginal utility applies to money, most people can never have enough...

[astroglide]

[ QUOTE ]
most people can never have enough...

[/ QUOTE ]

that is certainly true of your mother.

[prairieboy]

10 years ago, I'd wager 1/2 my net worth on a 51% probability. Of course, I was single, debt free, and broke back then.

Today, I'd wager 1/2 my net worth on a 85% probability. Of course I'm married with 2 kids, have car & mortgage obligations, and am worth considerably more.

[Tosh]

[ QUOTE ]
i dont think marginal utility applies to money, most people can never have enough...

[/ QUOTE ]

I can tell you categorically that it does and you are wrong.

[Paul2432]

I assume this is a one time only offer. That is, if I lose I cannot bet 50% of whatever my remaining net worth is at the same odds.

That said, I would say 65%. Most of my money is in retirement accounts that I won't need for a long time. Losing won't hurt that badly. Winning might let me retire a few years sooner.

A related question: At a 50% chance of loss what minimum return would you need to risk 50% of your net worth. I would say around 1.5:1 for me.

Paul

[Doctaprofit]

Its all theory anyway

[ZeeJustin]

My living expenses are minimal, and 50% of my net worth is a sufficient bankroll for the games I play in, so I would do this with a 55% chance of winning.

[dana33]

[ QUOTE ]
i dont think marginal utility applies to money, most people can never have enough...

[/ QUOTE ]
You seem not to grasp the concept of marginal utility. It does not mean that as you become richer, you say "no more!" at some point -- i.e., it does not mean that the value of an extra dollar drops below zero. It does mean that an extra $1000 when you're broke is much more significant to you than an extra $1000 when you already have a million.

[Tosh]

[ QUOTE ]
Its all theory anyway

[/ QUOTE ]

What you said is still wrong.

[BigBiceps]

to risk 50% of my net worth, I would have to win 95% of the time.

to risk 100% of my net worth, I would have to win 99.99% of the time.

I am somewhat risk averse.

[Analyst]

[ QUOTE ]
i dont think marginal utility applies to money, most people can never have enough...

[/ QUOTE ]

Not correct, although most people have a fairly large range where their risk tolerance makes the absolute value of the wager irrelevant.

[ZeeJustin]

[ QUOTE ]
to risk 50% of my net worth, I would have to win 95% of the time.

to risk 100% of my net worth, I would have to win 99.99% of the time.

I am somewhat risk averse.

[/ QUOTE ]

Quit poker now.

[J.R.]

Why?

[Tosh]

What about the looney who gambled everything on a roulette spin, obviously getting worse than 50% chance of winning. Especially crazy seeing as he sold everything he owned for about 20% of its value and what he won wouldn't even buy a decent flat in London.

[Bob T.]

Quit poker now.

He doesn't need to quit poker, he just need to play for a small percentage of his net worth.

[jasonHoldEm]

Hmmm...if I gamble with half of my (negative) net worth and lose does this put me in a better situation?

[Richard Berg]

[ QUOTE ]
i dont think marginal utility applies to money, most people can never have enough...


[/ QUOTE ]
So you wouldn't mind, say, a regressive income tax?

[pzhon]

[ QUOTE ]
Its all theory anyway

[/ QUOTE ]

So is the theory of gravity.