Tripp Lyons

• Tripp Lyons 21 Nov 2024 23:30 UTC

  1 point

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  on: What is the alpha in one bit of ev­i­dence?

  Let’s say the market prices in a 0.1% chance of extinction per century, and you think there’s a 50% chance we’re dead in the next 25 years. This is about 12 bits of evidence.

  Where did the 12 bits number come from? I’m getting $lo{g}_2\left(0.5/0.001\right)+lo{g}_2\left(100/25\right)\approx 11$ bits.

  Edit: I think it comes from the odds ratio: $lo{g}_2\left(999/1\right)+lo{g}_2\left(100/25\right)\approx 12$ bits.