I think there are some interesting things in for example analysing how large of a pot you should enter if you’re a professional poker player based on your current spendable wealth. I think the general theory is to not go above 1/100th and so it my actually be rational for the undergraduates not to want to take the first option.
Kelly criterion arguments implicitly slip in just the sort of “population ethics over future selves” reasoning I mentioned—treating your future selves as a sort of population, you don’t just want that population to have a high mean winnings driven by a few outliers, you want most of that population to be well off even if it means lower average earnings.
Also, I have accidentally tricked you, sorry—the $100 example is from the 2000 paper and seems more intuitive to me, so I used it, but the paper trying this on undergrads used $10 and $11. For students to be worried because of Kelly considerations, their bankroll would have to be on the order of $250.
you want most of that population to be well off even if it means lower average earnings.
This also comes up in the paradox pointed out by Ole Peters, that if offered a repeated 50% chance to either increase your bankroll by 50% or decrease it by 40%, if you chase the expected money then you almost certainly lose almost everything. Your possible enormous profit is concentrated into a smaller and smaller sliver of the space of possible outcomes.
How would you bet?
ETA: I see that Taleb mentions Peters (favourably) near the end of the video linked in Hallgren’s comment above..
I honestly don’t understand what high multiples of my current utility would look like. So barring a better understanding of how my preferences and the world interact I’d have to pass (or claim that the game is confused) even if the game was advertised as playing for utilons and not just money.
I think there are some interesting things in for example analysing how large of a pot you should enter if you’re a professional poker player based on your current spendable wealth. I think the general theory is to not go above 1/100th and so it my actually be rational for the undergraduates not to want to take the first option.
Here’s a taleb (love him, hate him) video on how that comes about: https://youtu.be/91IOwS0gf3g?si=rmUoS55XvUqTzIM5
Kelly criterion arguments implicitly slip in just the sort of “population ethics over future selves” reasoning I mentioned—treating your future selves as a sort of population, you don’t just want that population to have a high mean winnings driven by a few outliers, you want most of that population to be well off even if it means lower average earnings.
Also, I have accidentally tricked you, sorry—the $100 example is from the 2000 paper and seems more intuitive to me, so I used it, but the paper trying this on undergrads used $10 and $11. For students to be worried because of Kelly considerations, their bankroll would have to be on the order of $250.
This also comes up in the paradox pointed out by Ole Peters, that if offered a repeated 50% chance to either increase your bankroll by 50% or decrease it by 40%, if you chase the expected money then you almost certainly lose almost everything. Your possible enormous profit is concentrated into a smaller and smaller sliver of the space of possible outcomes.
How would you bet?
ETA: I see that Taleb mentions Peters (favourably) near the end of the video linked in Hallgren’s comment above..
I honestly don’t understand what high multiples of my current utility would look like. So barring a better understanding of how my preferences and the world interact I’d have to pass (or claim that the game is confused) even if the game was advertised as playing for utilons and not just money.
Assume the game is offered for money and utility is never mentioned. Do you play?
Tempting, but nah.