There is an old saying in this country that Australians would bet on two flies crawling up a world. There is some truth to it. After all, two up is a legendary Australian game.
I came across an interesting example, one with a twist. It is also an example that shows why I am not a naturally good gambler.
Eldest is a member of what I can only describe as a Christmas club gambling syndicate. It works like this.
Each member of the syndicate puts a fixed amount of money into a pool each week. Half that money is placed in a high yield savings account. The other half is gambled. Each member takes it in turn to gamble that amount.
They can bet on whatever they like, and you can bet on just about anything in Australia. The results if any are then banked in the savings account. Some weeks nothing, other weeks part of the stake, sometimes significant gains. They all have some fun, knowing that at the end of the year there will be a significant minimum amount of cash available to each for Christmas presents.
I said that the example shows why I am not a naturally good gambler.
A week back, it was eldest's turn and she decided to bet on the result's of the Reserve Bank's deliberations on interest rates. She emailed me for advice. I thought that the chances were 50/50, so go for a cut. It was only a little later that I thought how dumb!
If the odds are 50/50, go for the side of the equation offering the best odds. It wouldn't affect the chances of winning, but would increase the amount won if successful. See what I mean about dumb?
7 comments:
Jim
Perhaps you could gain some comfort from reading Daniel Kahneman's 'Thinking fast and thinking slow'. He argues that nearly everyone is probabilistically challenged.
But I have just found an alternative view here.
That's a very interesting link, Winton. I suspect kvd would find it interesting.
Jim, if we view this as a case study I obviously can't maintain that people never learn anything from case studies. Having had the experience you discuss,you are not likely to make the same mistake again when confronted with a similar problem.
The post you referred me to suggested that learning from case studies can mean learning from experience. And the Stein article makes the very good point that people can learn from their experience when they make errors in probabilistic decision-making.
I have also had a practical demonstration of the potential to learn from a case study. If my recent experience is viewed as a case study, I could learn not to overstate the case against the potential to learn from case studies. The problem is in making inappropriate generalizations.
Winton: If my recent experience is viewed as a case study, I could learn not to overstate the case against the potential to learn from case studies. The problem is in making inappropriate generalizations.
- so, are you sure that in an earlier life you weren't a script writer for Monty Python?
Or was it 'Yes, Minister'?
kvd
Jim, just to be perfectly clear, because you cannot see my gentle smile, the above was written in admiration and acknowledgement of Winton's skill.
And also that link of his is well worth a careful read - if I might be allowed a possibly inappropriate generalisation.
kvd
kvd
Um, it can't have been an earlier life. I owe a huge debt to the script writers of Monty Python and Yes Minister. I think they helped to keep me sane. Some might dispute that, but it is not a suitable subject for a case study!
Quite right, Winton! If it is an appropriate case study, you don't want it carried out. If it's not, why carry it out? And so on.
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