I think a missing part to a lot of these ponderings and theories is a bit of epistemic humility. There is a distinct lack of questioning of the actual likelihood of the wager’s payout. Especially at extremes, it’s just impossible to calibrate probabilities accurately enough to make fine-grained expectation decisions.
In regions where you have near-linear utility, and the lower bound (zero) is just part of your evaluative range, still linear (the gold coins example), you probably SHOULD be pure-EV-maximizing. In sequences where the bounds are undefined and the zero-bound is special (you stop playing), Kelly takes over.
But either way, in situations of very distant (in probability, quantity, or time) outcomes, you can’t calculate closely enough to make purely-rational optimal decisions. And it’s VERY reasonable to discount the distant parts more than the closer parts—not a utility discount, but a certainty discount. I don’t know if the universe is perverse, but many agents are adversarial and I just don’t believe a 51% coinflip in my favor is ACTUALLY getting paid out that way.
And this is magnified for short-term risks traded against long-term benefits.
I disagree strongly with SBF’s answer to Tyler Cowen’s Earth doubling problem, but I don’t know what to do once the easy escapes are closed off. I’m curious if someone does.
I don’t disagree in principal, but I don’t think there’s any practical way to believe the scenario. Just the evidence I’d need to believe that “creating 100 earths in noninteracting universes, conditional on a behavior inside this universe” is kind of overwhelming. Destroying this earth, I can believe much more easily (and have well over 100x more credence would happen in the “lose” condition than the “win” condition).
I predict with 30% confidence that, by end of 2027, a public report on the FTX collapse by a US Government agency will identify SBF or Caroline Ellison’s attitude towards risk as a necessary cause of the FTX crash and will specifically cite their writings on double-or-nothing bets.
I’d give that much less than 30%, if you mean “court or well-respected media report”. If you include blogs and speculative media, then it’s guaranteed to be claimed, but still pretty unlikely to be true. That attitude may be a contributing factor, or it may just be a smokescreen and not actually believed at all. But it’s at best secondary to the real cause, which is criminally arrogant negligence that SBF and his company were so much smarter than everyone else and didn’t have to actually pay attention or manage the risks that were keeping others from making all this obviously-easy money.
I think a missing part to a lot of these ponderings and theories is a bit of epistemic humility. There is a distinct lack of questioning of the actual likelihood of the wager’s payout. Especially at extremes, it’s just impossible to calibrate probabilities accurately enough to make fine-grained expectation decisions.
In regions where you have near-linear utility, and the lower bound (zero) is just part of your evaluative range, still linear (the gold coins example), you probably SHOULD be pure-EV-maximizing. In sequences where the bounds are undefined and the zero-bound is special (you stop playing), Kelly takes over.
But either way, in situations of very distant (in probability, quantity, or time) outcomes, you can’t calculate closely enough to make purely-rational optimal decisions. And it’s VERY reasonable to discount the distant parts more than the closer parts—not a utility discount, but a certainty discount. I don’t know if the universe is perverse, but many agents are adversarial and I just don’t believe a 51% coinflip in my favor is ACTUALLY getting paid out that way.
And this is magnified for short-term risks traded against long-term benefits.
I don’t disagree in principal, but I don’t think there’s any practical way to believe the scenario. Just the evidence I’d need to believe that “creating 100 earths in noninteracting universes, conditional on a behavior inside this universe” is kind of overwhelming. Destroying this earth, I can believe much more easily (and have well over 100x more credence would happen in the “lose” condition than the “win” condition).
I’d give that much less than 30%, if you mean “court or well-respected media report”. If you include blogs and speculative media, then it’s guaranteed to be claimed, but still pretty unlikely to be true. That attitude may be a contributing factor, or it may just be a smokescreen and not actually believed at all. But it’s at best secondary to the real cause, which is criminally arrogant negligence that SBF and his company were so much smarter than everyone else and didn’t have to actually pay attention or manage the risks that were keeping others from making all this obviously-easy money.