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 Psychology Discussions of psychology as applied to poker and other gambling games.

 06-15-2012, 10:50 AM #1 Pooh-Bah     Join Date: Apr 2009 Posts: 3,768 -EV choice for less variance/sure thing Today randomly had the 3 door, you pick one, announcer opens one of the other ones do you change or not discussion with gf. Afterwards she had been studying for a finance exam and came back to me with this question Lottery 1- \$10,000 1% chance you'll win Lottery 2- \$15,000 0.8% chance you'll win. Lottery 1a- \$10,000 100% chance you'll win lobber 2a- \$15,000 80% chance to win. pick between 1 and 2, and then between 1a and 2a... did you pick the same number in both cases? This changed to a discussion what about if it was \$1,000,000 100% chance or \$1,500,000 80% chance. She was saying the richer you are the less likely you are to gamble, while I was arguing that the poorer you are the less likely you are to gamble. As for example in the lottery 1a/2a that \$10,000 would mean more to some people who would likely not want the risk of nothing. Whereas the more rich (better of a bankroll) you have, the more likely you'd be willing to take the most +ev, because its not the end of the world if you end up with nothing. I remember a thread i read awhile ago (possibly years) but after looking for a good couple hours can't find it. Curious as to where people draw the line when starting to choose the -ev choice and why.
 06-15-2012, 11:23 AM #2 adept   Join Date: May 2005 Posts: 1,191 Re: -EV choice for less variance/sure thing It depends on your personal utility function.
 06-16-2012, 12:45 AM #3 adept     Join Date: Feb 2010 Location: in teh blog Posts: 1,135 Re: -EV choice for less variance/sure thing Id pick 2 then 1a. If i could loose 10k and not care i would happily take 2a, I don't have the br to risk it emotionally or financially
 06-17-2012, 10:20 AM #4 journeyman   Join Date: May 2012 Posts: 399 Re: -EV choice for less variance/sure thing Easier to gamble a bigger % if you're poor. If you lose you just start over. A lot of the time a win won't even help you it'll just make you pay more taxes, get less benefits, or maybe pick some better food off the value menu for a while. If you're rich and you lose you get put in a significantly worse situation. Going from a super-sized big mac to a regular filet 'o fish doesn't hurt like going from filet minon to ground chuck does. It's obviously easier to gamble a bigger # if you're rich. In these situations I think rich and poor alike would tend to pick 2 and 1a. Slightly more rich people would choose 2a.
 06-18-2012, 04:11 AM #5 journeyman   Join Date: Nov 2011 Location: Southwest USA Posts: 295 Re: -EV choice for less variance/sure thing To be fair. None of these are negative EV choices. Especially the other two. Unless it costs more than 10k/12k respectively to play. Its also a weird situation because I am assuming you can only play this game once. That really kills the whole idea of EV.
 06-18-2012, 04:49 AM #6 Pooh-Bah     Join Date: Apr 2009 Posts: 3,768 Re: -EV choice for less variance/sure thing I meant taking the choice where EV is less, so the relatively -EV choice, if that makes sense. Hm... didn't think about only one chance killing the idea of EV. Thats kind of interesting, I mean its still the EV whether its just one choice or not. This thread was written while debating this verbally, so now that i look at it a pretty ****ty thread, but was mostly hoping to find the original thread i was talking about.
 07-10-2012, 02:07 PM #7 grinder   Join Date: Feb 2007 Posts: 428 Re: -EV choice for less variance/sure thing Daniel Kahneman goes into a detailed analysis of this in his book Thinking, Fast and Slow
 07-12-2012, 04:44 PM #8 Carpal \'Tunnel     Join Date: Jul 2008 Location: I AM CAPITAO Posts: 6,400 Re: -EV choice for less variance/sure thing 2 and 2a, the amounts of money involved aren't large enough to pass on the +EV choice If it becomes 0.8% and 1% of 2m and 1m that's a more interesting one. 100% and 80% for 1m and 2m, i'd imagine most myself included would take the 100, but if it's 100% chance of 1m and 80% chance of 10m, I like to think i'd have enough gambool in me, but it's really close. TLDR it all comes down to how wealthy you are obv

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