Hypothetical situation - advice please.
Join Date: May 2020
Posts: 2
I have a hypothetical situation and am keen to get some different advice / points of view from poker players on what the best strategy is. Here it goes:
You are given $5k per day, the money is put into a account that you can access only ever once to withdraw. You can view the balance anytime. The maximum amount you can recieve is 100 days payments ($500k). At any point the amount of money in the account can start to go down at a rate faster than $5k/day. It may drop by 5% per day, 20% per day or go to zero - this is unknown and unpredictable. The situation will only occur once in your life.
When do you take the money, and what factors affect your strategy?
Join Date: Jul 2011
Posts: 2,805
Join Date: Nov 2015
Posts: 30
Your strategy should be determined based on the expected value of continuing each additional day.
However, your hypothetical is missing information that would help in this regard. E.g. How much % chance is there for the decrease to occur, is there a range for decreases (e.g 5%,20%,100%) or is it anywhere from 1-100% (are the odds for each % decrease equal or is it more likely that you will lose a lesser % than a higher %).
For e.g, if the chance of a decrease is only 0.01%, it would factor far less into my considerations than if it were 10% likely to occur, and if a decrease of 10% is more likely than a 100% decrease, I would have to factor that into my consideration.
With only the information you have now, the whole situation will boil down to merely how much you value 5k, and each additional 5k on top of that. Your risk appetite would probably be determined by the ability of the money to change your life. E.g. There is an obvious difference in how much you value $5k if you earn $1/month and if you earn $10k/month.
Join Date: Aug 2015
Posts: 5,678
There’s no way to tell if holding is +EV or not. I would withdraw on the first day. Factors that could change my mind would be knowledge of the probability distribution for losing different portions of our balance, or information that could help us guess (for example if other people have played the game before and we know the results, or even if we know who’s offering the game and why)
