Re: The FLip Flop Game

From: Norman Samish <ncsamish.domain.name.hidden>
Date: Mon, 11 Oct 2004 10:00:14 -0700

Hi Eric,
I'm laughing, not at you, but at the tendency we may have to see what we
want to see and not what's really there! Kory's explanation is a good one.
Maybe this even has something to do with Observation Selection Effects!
Norman
----- Original Message -----
From: "Eric Cavalcanti" <eric.domain.name.hidden>
To: "Kory Heath" <kory.heath.domain.name.hidden>
Cc: "Everything List" <everything-list.domain.name.hidden>
Sent: Monday, October 11, 2004 1:15 AM
Subject: Re: The FLip Flop Game

AAArrrrghhh!!!
I didn't read it carefully again!!!
Yes, it is not even-money. In the infinite
players case, even though you are equally
likely to win or lose, you win money in the
long run.

I am going to sleep... :)

Eric.

On Mon, 2004-10-11 at 17:52, Kory Heath wrote:
> At 12:20 AM 10/11/2004, Norman Samish wrote:
> >For example, if there are 3 players then the long-term odds are that each
> >game costs each player 25 cents. If there are 5 players, the average
> >cost
> >goes down to 6.3 cents per game. If there are 7 players, they make on
> >the
> >average 3.1 cents per game. If there are 9 players they make about 9
> >cents
> >per game.
> >
> >It isn't clear to me why this should be so.
>
> The issue is in the payout structure you suggest, which is that if you win
> you get \$2, and if you lose, you pay \$1. This is not an even-money
> proposition. If your chances of winning are exactly 1/3, then for every
> three times you play you will (on average) pay \$1 twice and win \$2 once,
> which is break-even. Therefore, you have a positive expectation if your
> winning chances are any greater than 1/3.
>
> In three-player Flip-Flop, your winning chances are only 1/4, so the
> three-player game is a bad bet even given this generous payout structure.
> However, as you add players, your chances of winning tend towards 50% (but
> never quite reach it). Very quickly, your winning chances will become
> greater than 1/3, and the game will suddenly have a positive expectation
> for you, and a negative one for the house.
>
> If the casino wants to guarantee profits, it must adjust its payout
> structure to an even-money proposition. In other words, losers pay \$1, and
> winners get \$1. As you add more players, your winning chances improve, but
> they're still always slightly less than 50%, so the game will always have
> a
> negative expectation for the players.
>
> As a side note, the common parlance in betting is that you pay a certain
> amount up front (the "bet"), and then if you win you get a certain amount
> back, while if you lose you get nothing. In this way of speaking, an
> even-money proposition would be to bet \$1 and get \$2 back if you win. The
> bet that you proposed was equivalent to betting \$1 and getting \$3 back
> when
> you win, which is better than even-money.
>
> -- Kory
>
>
Received on Mon Oct 11 2004 - 13:03:19 PDT

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