ENTIRE bankroll on AA, a variation

[Derek in NYC]

I didn't follow the original thread too closely, but I thought of a mental exercise this morning for all of you guys who said "yes" and that it wasnt even close.

You hold KK. Villain holds AA, same suits. Are you willing to stake your whole bankroll preflop, assuming Bill Gates is willing to lay you 6:1 odds?

If your answer is no, explain why. What odds would be required for you to take this bet. Explain why.

[SmileyEH]

As long as my bank account is intact I'd take it in a second.

-SmileyEH

[sfer]

[ QUOTE ]
I didn't follow the original thread too closely, but I thought of a mental exercise this morning for all of you guys who said "yes" and that it wasnt even close.

You hold KK. Villain holds AA, same suits. Are you willing to stake your whole bankroll preflop, assuming Bill Gates is willing to lay you 6:1 odds?

If your answer is no, explain why. What odds would be required for you to take this bet. Explain why.

[/ QUOTE ]

Derek, make the gamble easier (assuming this is a straightforward risk aversion question). You think of a number between 1 and x. Gates guesses. If you win, you double your bankroll. If you lose, you wait for July's rakeback and start over. How big does x have to be?

[Derek in NYC]

i have a better idea, i'll set it up as a poll

[W. Deranged]

This is a classic risk-aversion question.

When I was learning microeconomic theory I always considered the best example of a risk-neutral individual to be Doyle Brunson, who claimed in Super System he'd bet everything he had on a coin flip getting 55-45. His argument hinged on the idea that he was confident he could regenerate his bankroll without much trouble. In other words, the lack of limitations on his bankroll translated to a totally flat utility curve for money; $1 to him was exactly of equivalent value regardless of whether he was broke or had millions.

A standard way this question is phrased in economic terms is this:

Instead of just being able to take the bet or not, assume you would in fact have to pay a certain percentage of your bankroll in order to NOT have to take the bet. What percentage are you willing to pay?

This value, which is related to the curvature of your utility function in money, is basically how one would actually measure risk-aversion.



As for my answer to the question, I would risk my whole bankroll because it's small, I'm young, have plenty of potential for future earnings, and in fact regularly put up to 20% of my bankroll on the table at a given time (basically because I am at no risk of going permanently broke and don't play for a living). I assume I'm kind of an exception.

[Derek in NYC]

[ QUOTE ]
This is a classic risk-aversion question.

[/ QUOTE ]

Yes, but in poker terms, although I suspect the people who say yes to pushing with AA, will require better than 4:1 odds to push when they are the dog. This exposes the fallacy of their proclamation that "EV is GOD".

[sfer]

[ QUOTE ]
This is a classic risk-aversion question.

When I was learning microeconomic theory I always considered the best example of a risk-neutral individual to be Doyle Brunson, who claimed in Super System he'd bet everything he had on a coin flip getting 55-45. His argument hinged on the idea that he was confident he could regenerate his bankroll without much trouble. In other words, the lack of limitations on his bankroll translated to a totally flat utility curve for money; $1 to him was exactly of equivalent value regardless of whether he was broke or had millions.

A standard way this question is phrased in economic terms is this:

Instead of just being able to take the bet or not, assume you would in fact have to pay a certain percentage of your bankroll in order to NOT have to take the bet. What percentage are you willing to pay.

This value, which is related to the curvature of your utility function in money, is basically how one would actually measure risk-aversion.



As for my answer to the question, I would risk my whole bankroll because it's small, I'm young, have plenty of potential for future earnings, and in fact regularly put up to 20% of my bankroll on the table at a given time (basically because I am at no risk of going permanently broke and don't play for a living). I assume I'm kind of an exception.

[/ QUOTE ]

I offer everyone this, written by a friend years ago, before I played poker.

[W. Deranged]

[ QUOTE ]
[ QUOTE ]
This is a classic risk-aversion question.

When I was learning microeconomic theory I always considered the best example of a risk-neutral individual to be Doyle Brunson, who claimed in Super System he'd bet everything he had on a coin flip getting 55-45. His argument hinged on the idea that he was confident he could regenerate his bankroll without much trouble. In other words, the lack of limitations on his bankroll translated to a totally flat utility curve for money; $1 to him was exactly of equivalent value regardless of whether he was broke or had millions.

A standard way this question is phrased in economic terms is this:

Instead of just being able to take the bet or not, assume you would in fact have to pay a certain percentage of your bankroll in order to NOT have to take the bet. What percentage are you willing to pay.

This value, which is related to the curvature of your utility function in money, is basically how one would actually measure risk-aversion.



As for my answer to the question, I would risk my whole bankroll because it's small, I'm young, have plenty of potential for future earnings, and in fact regularly put up to 20% of my bankroll on the table at a given time (basically because I am at no risk of going permanently broke and don't play for a living). I assume I'm kind of an exception.

[/ QUOTE ]

I offer everyone this, written by a friend years ago, before I played poker.

[/ QUOTE ]

Sfer, that's a really fantastic link. Thanks for bringing that to our attention.

[sfer]

[ QUOTE ]
[ QUOTE ]
This is a classic risk-aversion question.

[/ QUOTE ]

Yes, but in poker terms, although I suspect the people who say yes to pushing with AA, will require better than 4:1 odds to push when they are the dog. This exposes the fallacy of their proclamation that "EV is GOD".

[/ QUOTE ]

Right. It's usually assumed that magnitude amplifies risk aversion. Hence one is willing to ride a roller coaster but unwilling to play Russian Roulette.

[Derek in NYC]

[ QUOTE ]
It's usually assumed that magnitude amplifies risk aversion. Hence one is willing to ride a roller coaster but unwilling to play Russian Roulette.

[/ QUOTE ]

In this hypothetical, however, the magnitude of consequence is the same, namely, risk of ruin.