Social media has proven more than capable of creating effective social contexts for persuading people.
LLMs are perfectly capable of operating in these social contexts. Particularly if they have (as in the case of TikTok and China) the support of the owner of the site.
Do you have specific cause to believe that LLMs will fail to persuade in these social contexts?
The simple reason to use Kelly is this.
This can be shown by applying the strong law of large numbers to the random walk that is the log of your net worth.
Now what about a finite game? It takes surprisingly few rounds before Kelly, with median performance, pulls ahead of alternate strategies. It takes rather more rounds before, say, you have a 90% chance of beating another strategy. So in the short to medium run, Kelly offers the top of a plateau for median returns. You can deviate fairly far from it and still do well on average.
So should you still bet Kelly? Well, if you bet less than Kelly, you’ll experience lower average returns and lower variance. If you bet more than Kelly, you’ll experience lower average returns and higher variance. Variance in the real world tends to translate into, “I don’t have enough left over for expenses and I’m broke.” Reducing variance is generally good. That’s why people buy insurance. It is a losing money bet that reduces variance. (And in a complex portfolio, can increase expected returns!) So it makes sense to bet something less than Kelly in practice.
There is a second reason to bet less than Kelly in practice. When we’re betting, we estimate the odds. We’re betting against someone else who is also estimating the odds. The average of many people betting is usually more accurate than individual bettors. We believe that we’re well-informed and have a better estimate than others. But we’re still likely biased towards overconfidence in our chances. That means that betting Kelly based on what we think the odds are means we’re likely betting too much.
Ideally you would have enough betting history tracked to draw a regression line to figure out the true odds based on the combination of what you think, and the market things. But most of us don’t have enough carefully tracked history to accurately make such judgments.