Aces High Bulletin Board
General Forums => The O' Club => Topic started by: Anaxogoras on May 14, 2009, 10:29:51 AM
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I give you $1000. Then I give you a choice: we flip a coin for a chance at an extra $1000, or I just give you an extra $500. Which do you choose?
I give you $1000, but, since I'm not nice, I give you another choice: we flip a coin to decide whether I take it all away, or you just give me $500. Which do you choose?
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They have a saying a South America which is roughly translated as "It is better to have a bird on your hand than 100 flying". I am not sure where it is from, but I haerd it in Venezuela many a years ago. So, if you give me $1,000.00. I would thank you for it. No point on taking a chance on loosing part of it.
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They have a saying a South America which is roughly translated as "It is better to have a bird on your hand than 100 flying". I am not sure where it is from, but I haerd it in Venezuela many a years ago. So, if you give me $1,000.00. I would thank you for it. No point on taking a chance on loosing part of it.
I agree with that one.
No need to get selfish, $1,000 gets me 66 1/3 months of AH! :D
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Heh, this problem is working as intended :) .
Personally, I'd gamble for the big money in scenario 1 and gamble for keeping the most in scenario 2.
The "expected values" for both options in both games are the same.
-Zap
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I say no thanks to each offer of a coin toss.
Question 1...I get $1,500
Question 2...I get $1,000
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Separate or sequential scenarios?
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I'd go with separate
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If I read it right:
1- 1000 and 500 extra.
2- 1000 and (assuming you can't opt out of the next choice) I flip a coin if the scenarios are sequential, or just give you 500 if they're separate. If I can opt out of the choice, I just take the 1000 and walk away.
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You show up with 2,000 to part with and I'd be walking away with all of it. :devil
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I think it's more interesting if instead of 500 dollars that you just give or recieve in 1 & 2, it's 375. Would that change any answers?
-Zap
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Separate scenarios.
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I think you can't opt out of the second choice. You have to decide if you just want to give up $500 or risk the grand on a coin toss. Makes for a more interesting dilema.
I'm undecided.
Now...I'm thinking about it.
...way too much.
I hate you!
Stop staring at me!
Arrrgghhhhhhhh
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1. why gamble? im fine with 1500
2. I'd like to see you take 500 dollars out of my hand. :rofl
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Heh, this problem is working as intended :) .
Personally, I'd gamble for the big money in scenario 1 and gamble for keeping the most in scenario 2.
The "expected values" for both options in both games are the same.
-Zap
It must be badly phrased because they don't seem to be the same thing.
I give you $1000. Then I give you a choice: we flip a coin for a chance at an extra $1000, or I just give you an extra $500. Which do you choose?
I give you $1000, but, since I'm not nice, I then give you another choice: we flip a coin to decide whether I take it all away, or you just give me $500. Which do you choose?
Is that what it's supposed to mean?
If not,
1- You're given 1000, no conditions. Then given a choice for either a 50/50 chance at 1000 extra, or 500 no conditions. So here it's 1000+(1000 or 0; or 500). A choice between a scenario leading to either 1000 or 2000, and another that leads to 1500.
2- You're given 1000, then given a choice for either a 50/50 chance at -1000, or -500. Here it's 1000+(0 or -1000; or -500). So the choice is between a scenario that gambles equally between 0 or 1000, and another that leads to 500 everytime.
So the two situations are apples and oranges, the way I understand them. The way I see it, you've got money magically without any working for it. An extra 50% in the first one is enough to outweigh risking 50% on top of the first sum for the possibility of 33% more than what you get with the no-conditions choice. In the second scenario, again money out of thin air with a choice between either a 50/50 chance at 100% of the sum, or a no-conditions choice for 50% of the sum. It'd depend on the circumstances, but in the abstract I'd take the guaranteed 50% choice unless the sum was negligible enough.
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They have a saying a South America which is roughly translated as "It is better to have a bird on your hand than 100 flying". I am not sure where it is from, but I haerd it in Venezuela many a years ago. So, if you give me $1,000.00. I would thank you for it. No point on taking a chance on loosing part of it.
I'm Venezuelan/Italian, was born and raised there. Beautiful country, horrible dictator.
-FYB
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Just quickly before I head out to the gym, the expected values thing works by taking the outcomes * the probability.
So expected value just for game one is:
Taking the 500 gives you 1000 + (500 * 1) = 1500
Going for the coin flip gives you 1000 + (1000*.5 + 0*.5)= 1500
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You don't get 1500 in the first one's coin toss.
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I'm just guessing. Have you recently read "How We Decide"?
Regards,
Wab
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I give you $1000. Then I give you a choice: we flip a coin for a chance at an extra $1000, or I just give you an extra $500. Which do you choose?
I give you $1000, but, since I'm not nice, I give you another choice: we flip a coin to decide whether I take it all away, or you just give me $500. Which do you choose?
To answer your question, my gut tells me those are all equivelent probabilities. But I haven't put it to pencil and paper. Hence why I have never had a facination with Las Vegas. :huh Or "Lost Wages" in the original Spanish pronounciation.
:salute,
Wab
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i would take the 1000.00 take the 500.00 take the 1000.00 give you 500.00 so id walk away with 2000.00
<S>
I'm guessing here the presupposition is what is the better choice mathematically. I would take the sure bet over the odds.
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Gavagai you make my head hurt :furious
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I'm just guessing. Have you recently read "How We Decide"?
Regards,
Wab
No, but I recently read "The Ascent of Money" and "The Age of Keynes," and this problem comes from one of these books, I'm not sure which one. The other problem with donkeys and a million bucks I just heard from word of mouth when I used to play a lot of poker.
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You don't get 1500 in the first one's coin toss.
Right, but that's the average return(expected value) you'd expect if you asked 10 people who played the game and went for the extra 1000 what they made. With the values presented by Gavagai the average return you can expect from either decision is the same. It just shows how risk adverse you may or may not be.
Like I said though, if he would only hand over $350 in the first game but the coin flip option remained the same. Would you still just take the $350 knowing that people taking the risk are likely to make more money?
-Zap
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When someone says "EV is the same," they mean the EV for the coin toss or the sure thing in the first game is $500; the EV for the coin toss or the sure loss in the second game is -$500. In both games, the choices yield the same EV.
In empirical studies, 90% of people say they prefer the coin toss when they have a chance to gain. On the other hand, 90% of people prefer the sure thing when they know there's a potential for loss.
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I give you $1000. Then I give you a choice: we flip a coin for a chance at an extra $1000, or I just give you an extra $500. Which do you choose?
I give you $1000, but, since I'm not nice, I give you another choice: we flip a coin to decide whether I take it all away, or you just give me $500. Which do you choose?
I quickly look around to see if there are any witnesses, then I stab you and take all that cash you are lugging about....
But more seriously, first case, I have $1000 to gain and only $500 to loose. I take that bet.
Second case, I have $1000 to lose and only $500 to gain. I do not take this bet.
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1. Take $1500 free money
2. Take $500 free money
Now, if you give me $1000 and tell me I can double or nothing on a coin flip I will flip the coin. In that scenario I either end up with $2000 or back where I started with nothing.
Since I had nothing to begin with, I really have nothing to lose if I lose the flip because I'm right back to the beginning.
wrongway
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First senario:
The 1000$ you already game me are irrelevant as I keep them either way - I put them in my pocket. Then I have the choice between getting 500$, or getting 500$ on average. It is the same as if you gave me 500$ and asked me to flip a coin for double or nothing.
The big question is are we playing this once or many times? If we play once, it depends if this punk feels lucky. If we play many times, I gamble and wait for a highly probable fluctuation threshold before quiting - play the variance.
Second:
I assume I have to choose one of the two? In that case it is again equivalent to giving me 500$ and playing double or nothing. Again, since I cannot go to negative profit here, if we play many times, set a highly probable limit for a fluctuation and quit once you hit it.
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Right, but that's the average return(expected value) you'd expect if you asked 10 people who played the game and went for the extra 1000 what they made. With the values presented by Gavagai the average return you can expect from either decision is the same. It just shows how risk adverse you may or may not be.
Like I said though, if he would only hand over $350 in the first game but the coin flip option remained the same. Would you still just take the $350 knowing that people taking the risk are likely to make more money?
-Zap
I get it. The context was aggregate. I agree on 350 being a tighter alternative. I think I might flip a coin myself, to choose between the no-conditions 350 and the 50/50 larger payoff.
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In empirical studies, 90% of people say they prefer the coin toss when they have a chance to gain. On the other hand, 90% of people prefer the sure thing when they know there's a potential for loss.
interesting, I would have said 90% would take the money in both cases as about 10% of people are risk-seekers. *scratches head*
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I'm pretty sure I would take the coin toss both times but I'm not sure how the conveyor belt will affect the odds.
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interesting, I would have said 90% would take the money in both cases as about 10% of people are risk-seekers. *scratches head*
Yes, if the scenario didn't start off with "I give you $1000." Having safe money in the pocket even makes the conservative willing to take on some risk for the prospect of extra gain.
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I think the original setup was wrong.
The psychology part is really this:
I give you 500 bucks and then make you toss a coin whether or not to gain 500 more
vs
I give you 1000 bucks and make you toss a coin whether or not I will take 500 away from you.
The first one sounds very positive while the latter sounds negative even though both have the same possible results.
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In the same vein... (http://www.ted.com/index.php/talks/lang/eng/dan_ariely_asks_are_we_in_control_of_our_own_decisions.html)
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Good find. Very interesting!
-Zap
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I'm pretty sure I would take the coin toss both times but I'm not sure how the conveyor belt will affect the odds.
It will NOT fly.