Gambling degenerates: East-West Hula Game 2 (1 Viewer)

[Mr. Vegas]

Yes, you have made many points in regard to this. Your quote of mine was made in a response to another poster who did not make any point.

It is about whether you should hedge in order to "guarantee a win".  You have not made any point to support that claim. 

No offense, but I have defended this claim relentlessly. I'm a firm believer in hedging if it gets you a guaranteed win, i.e., taking lesser odds on one side to apply to the other side to get your initial bet back and/or a profit on either outcome.

 

[GiantsRule]

Yes, you have made many points in regard to this.  Your quote of mine was made in a response to another poster who did not make any point.

It is about whether you should hedge in order to "guarantee a win".  You have not made any point to support that claim. 

No offense, but I have defended this claim relentlessly. I'm a firm believer in hedging if it gets you a guaranteed win, i.e., taking lesser odds on one side to apply to the other side to get your initial bet back and/or a profit on either outcome.

My apologies. I do appreciate your input. Incidentally, I'm avoiding any sort of bets involving hedging this weekend. I've taken two prop bets*, both longshots, that do not have a hedging opportunity but pay nicely.*--If interested, they are:

Jerome Bettis to have a reception (Yes, +225). I think he's going to play a lot more based on this "homecoming" that has been discussed since the season kicked off. He's not usually in the game in passing downs, but if it's 1st or 2nd down and Seattle breaks up the play, he might find himself open to catch a little squib. Even if it's for negative yards, it counts as long as he makes the catch.

Different Seahawks with a pass reception, Over 6.5, +140. My favorite Super Bowl prop. You should see many players getting a chance at a catch in this big game. In order for this to cash, Alexander will almost have to catch at least one pass out of the backfield. If Morris comes in on third and long, I like my chances of seeing 7 players haul in a pass.

 

[Perfect Tommy]

1st, it is a classic mistake to believe that the equity gained when the stock goes up isn't a real gain.  Since you have the option to cash out, it is a real gain.  If you choose not to cash out, then you are continuing to gamble.  But that does not make the equity you have gained in any way less tangible.  In the same way, when CAR reached the NFC Championship game, the future bet on them to get to the superbowl had a real, tangible gain if value.  It is this same error that leads people to refuse to sell a stock after it has gone down.  They mistakenly believe that the losses are not real or tangible until they actually sell the stock. 

I don't think I disputed this. We're arguing semantics here -- yes, it's a real gain in value, but unless you sell, its value is on paper only. You implied that therefore hedging somehow makes the profit real. If you accept that something with "value on paper only" is worth the same as gold coins under your mattress, then we are in agreement.

2nd.  You never said in your example that the hedge price is now considered by you to be the fair price.  If that is the case, then hedging is fine and I never said otherwise.

I said that the bettor felt the Sea-Car odds were reasonable -- in other words, that there is no perceived advantage in a vacuum. Isn't that the same thing, or am I missing something?Oops. I stand corrected. Sorry.

3rd, of course it is better not to gamble if you have no advantage.  I never said otherwise.  Don't know where you got that.

I don't think I implied that you did. But in the context of a hedge, my instinct is that the rationale changes. Of course, my instinct isn't very good, which is why I'm trying to understand your argument. Are you saying that the existence of the earlier bet should not affect the decision on whether to make that hedge bet? I believe you said earlier that it makes sense to hedge as a risk-minimization strategy. I just don't get how that's different than what I'm saying.No, the existance of the original bet should certainly affect future bet decisions. If, for example, the CAR future holder loves CAR vs. SEA, he should still not bet any more on them as he already has a huge bet on them. If he likes SEA, then he should be much more eager than normal to bet on them as he enjoys the double benefit of betting on SEA and lowering risk at the same time. I believe we agree that there is value in minimizing risk.

 

[BassNBrew]

Just wanted to say that I appreciated the responses on both sides of the fence in this thread. I learned several things that I will be applying in the future.

 

[AB in DC]

Thanks for elaborating, PT. I think we're on the same page now.

 

[jeff_eaglz]

Since we're all about improving one another, can we go over this "flat utility curve" that I've heard in a few posts?Sounds like Economics 101, but I'd like to hear a gambler's perpective.TIA.

 

[AB in DC]

Sorry -- I'm not a gambler, and not really an economist either. But I did stay in a Holiday Inn Express last night.

 

[Perfect Tommy]

This is just talking about the value of a dollar. A flat utility curve means that a dollar is worth the same to you no matter how much or little money you already have. It makes the mathematical calculations much easier if the utility curve is flat. However, nobody really has a flat utility curve. If you are broke, that next dollar means a lot. If you are a millionaire that next dollar means very little. For the purposes of our betting, we often assume that the size of the bet is such that the value of money to you is similar whether you win or lose your bet. That is the flat utility curve. It is actually the case that if you lose, you now have less money and each dollar is just a little bit more important. If the difference in the value of a dollar changes enough, it can make sense to spend the premium to hedge a bet so you don't lose money that is more valuable to you further along your utility function. When speaking of math problems relating to gambling it makes a big difference whether you include the curvature of the utility function or assume the approximation of a flat utility function.

This from a gambler who has taken Econ 101.

Since we're all about improving one another, can we go over this "flat utility curve" that I've heard in a few posts?

Sounds like Economics 101, but I'd like to hear a gambler's perpective.

TIA.