Be careful—there’s a lot of details in how betting differs from other kinds of decision-making (and how it’s similar). Most wagers are parimutuel, meaning they’re strictly zero-sum and based on predicting better than other bettors. This leads to cases where you can be successful without having to know exactly how.
In real life, https://www.lesswrong.com/posts/qNZM3EGoE5ZeMdCRt/reversed-stupidity-is-not-intelligence . it matters not just that we’re underestimating the tail, it matters specifically what part of the tail are more likely than consensus is giving it. This is variable-sum: you could be even more wrong than the general approach, and everybody loses (you could also be right and everybody wins, but that’s a smaller portion of possibility-space).
Do make direct wagers against people who are underestimating the tail. But don’t accidentally bet on just one element of the tail because you think the rest of the tail is big. Also, don’t forget odds—I expect your friend didn’t bet even-money on unlikely outcomes, they took advantage of the fact that percieved-unlikely events paid more on a win than it would cost if they lost. Don’t move resources from the head to the tail unless you think the value is proportionally higher there.
Be careful—there’s a lot of details in how betting differs from other kinds of decision-making (and how it’s similar). Most wagers are parimutuel, meaning they’re strictly zero-sum and based on predicting better than other bettors. This leads to cases where you can be successful without having to know exactly how.
In real life, https://www.lesswrong.com/posts/qNZM3EGoE5ZeMdCRt/reversed-stupidity-is-not-intelligence . it matters not just that we’re underestimating the tail, it matters specifically what part of the tail are more likely than consensus is giving it. This is variable-sum: you could be even more wrong than the general approach, and everybody loses (you could also be right and everybody wins, but that’s a smaller portion of possibility-space).
Do make direct wagers against people who are underestimating the tail. But don’t accidentally bet on just one element of the tail because you think the rest of the tail is big. Also, don’t forget odds—I expect your friend didn’t bet even-money on unlikely outcomes, they took advantage of the fact that percieved-unlikely events paid more on a win than it would cost if they lost. Don’t move resources from the head to the tail unless you think the value is proportionally higher there.