Poll on risk aversion: a continuation of the Bankroll on AA thread

[ QUOTE ]
I said ten as that is a great bet, but I am tempted to do more. The reasoning that I want an even better bet, and more than 20 times my bankroll might not be negative EV for him. So I want him dropping as much as possible, as its all peanuts.

After all, this is a guy who loses $ if he takes time to go out of his way and pick up a twenty. He's gonna have to cough it up. That's why I'm gonna get him wasted before making this wager.

[/ QUOTE ]

it's all gonna be -EV for him unless you pick two, the question is variance for you.

[Derek in NYC]

There aren't too many responses yet, but interestingly, there seems to be a trifurcated (non normal) distribution: (1) those who require odds of 3-5x, those who require 10-12x, and those who require 20x (or likely would never take the bet or only take it with insane odds).

It would be an interesting followup to find out what types of players, backgrounds, etc. comprise these three discrete groups. Im not sure whether it is a socioeconomic variable, an age variable, a limit/skill variable, or what, that is driving this clustering.

[sthief09]

ok starting over


r = bankroll
x = x from the original question
p = opportunity cost


EV = [(x-1)/x]*r - (1/x)*(r+p)
= (rx - 2r - p)/x

has to be >0.

so rx-2r-p > 0
so rx-2r > p
so r(x-2) > p
so x-2 > p/r
so x > p/r + 2

so it is the poitn where x = p/r + 2, which for most people would lie around 3. the higher bigger the game the person plays, the more the opporutnity cost, and the more you'd need to do it.

it's also relatively insensative. as long as the person's opportunity cost is less than or equal to his roll, he should take it at x=3, which probably describes most low and middle limit players

??

[W. Deranged]

Derek,

I can tell you right now that two of the players who voted for 3 are non-professional players, full-time students, under the age of 25, who likely do not plan on relying on poker for primary income for any significant period.

I think that clearly is a big, big part of the issue.

[jskills]

[ QUOTE ]
You would not take a one-time gamble to get paid 2:1 on your money, where the odds of losing were one trillion factorial-to-1? Come on.

[/ QUOTE ]

Did I say that I wouldn't?

I just don't understand a one time risk of your roll when you're a huge underdog just because the potential to make a huge payout is there. I say again, if this is a bet I could repeat over and over, yes I would take 6-1 odds. But this poll has been presented as a one time deal, in which case I decline.

[ QUOTE ]
There aren't too many responses yet, but interestingly, there seems to be a trifurcated (non normal) distribution: (1) those who require odds of 3-5x, those who require 10-12x, and those who require 20x (or likely would never take the bet or only take it with insane odds).

It would be an interesting followup to find out what types of players, backgrounds, etc. comprise these three discrete groups. Im not sure whether it is a socioeconomic variable, an age variable, a limit/skill variable, or what, that is driving this clustering.

[/ QUOTE ]

Sup D,

FWIW, I chose more than 20. I built my 5/10 bankroll up from .10/.20 cent limit, and I've never put a dime in beyond my initial start up cost of one 50 dollar PP deposit and one 60 dollar Absolute deposit (my 10 cent 20 cent bankroll). I'm really proud of that. I've also never had to move down a limit once I've jumped up (I usually over-roll myself slightly before moving up). The negatives from that don't outweigh the positives of doubling my bankroll at any odds below 20 really, since I make plenty of $ in my real job (but will not invest any more of it in poker). Also, I wouldn't even play the next limit (10/20 6max) with my newfound bankroll because I'm still learning the ropes at 5/10 6max after 16K hands. That said, 5K is 5K and it would be nice to make a sweet cashout AND have a huge cushoin in the BR to handle the swings better.

just some thoughts from the pussy end of the spectrum.

Peace,
DMBFan23

[shant]

Cool post. I used your equation and got 3, which is what I just randomly felt was a comfortable number. Nice to see some reasoning behind it.

Define huge underdog. you're actually a huge favorite. you just have a risk of ruin (depending on N) that has a limit at which it becomes tolerable.

Interesting Followup number 2: we could calculate risks of ruin from this (pretty easy - there's a pretty obvious chance you go broke), then calculate risks of ruin from a poll titled "What is the minimum number of BB you'd need to permanently play X$/2X$ limit poker? and never drop down" and compare the associated risks of ruin. Actually that would be unintersting because people couldnt conceptualize "not drop down" correctly. I know I couldn't. that would lead me to overestimate. but it's an interesting thought.

[sthief09]

[ QUOTE ]
[ QUOTE ]
You would not take a one-time gamble to get paid 2:1 on your money, where the odds of losing were one trillion factorial-to-1? Come on.

[/ QUOTE ]

Did I say that I wouldn't?

I just don't understand a one time risk of your roll when you're a huge underdog just because the potential to make a huge payout is there. I say again, if this is a bet I could repeat over and over, yes I would take 6-1 odds. But this poll has been presented as a one time deal, in which case I decline.

[/ QUOTE ]


then you should move to Africa or something, because completely eliminating risk is not how we become successful in this country

[peterchi]

i never took econ. what's opportunity cost and how could it be a number greater than your bankroll?