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A rogue Romanian economist legally gamed the lottery

thehustle.co

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Re: A rogue Romanian economist legally gamed the lottery

#61

Post by femto113 »

bryanlarsen wrote: post #25
femto113 wrote: post #21

Earlier quoted context omitted.

Problem with this calculation it it assumes that exactly one person/group undertakes the buy-every-ticket strategy. As soon as there are two or more groups the chances of splitting the pot goes to 100%.

Actually, the spreadsheet assumes that nobody is undertaking the buy-every-ticket strategy, it is calculating the EV for a single ticket. In scenario #1, there are 1.93 tickets sold for every possible combination, meaning that on average, 1.93 people win the jackpot. If you go ahead and buy every ticket, that means 2.93 tickets per combination, reducing EV from 1.11 to 0.78.

Because of the payout model (all and only winning tickets split a fixed prize) the EV for buying multiple randomly distributed tickets and uniformly distributed tickets aren't the same. Consider if you were the only one playing a lottery with 100 combinations. If a ticket costs $1 and the jackpot is $100 one random ticket has an EV of $1. However if you buy 100 random tickets on average you'll only cover about 64 numbers, so your EV per ticket is just $.64, whereas if you buy uniformly distributed tickets the EV is constant up to the number of combinations. If you imagine raising the prize to $200 and that two people are playing this lottery and one buys 100 random tickets and the other buys every combination the random player has about a 36% of getting nothing, and will share the jackpot the remainder of the time. Overall the uniform player has an expectation that's almost twice as high as the random player, and makes a pretty strong case for buying every ticket if you're the only one that does it. It falls apart if you have to compete against another uniform player.

Re: A rogue Romanian economist legally gamed the lottery

#62

Post by delinka »

ggm wrote: post #59

The investors — small business owners, machine operators, housekeepers, and doctors — had been regaled with tales of riches, and promised participation in up to 9 lottos per year. Yet, they’d only received a $1.4k return on their $4k investment. Folks: thats > 25% return on investment. I'm sorry but my sympathies with these investors walked out the door at this point: If you can get 25% ROI, stop looking for more.

Is that $1.4k in addition to getting their $4k back? I always assume that with lotto-based shenanigans, the "return" isn't actually a profit, but the maximum of payouts after having bought all the chances their money could buy. I'll spend $20 on tickets for a large jackpot, and I'll will $2 on occasion - that's not a "10% return" but a "10% refund," and I'd expect a non-finance journalist to get that wrong.

Re: A rogue Romanian economist legally gamed the lottery

#63

Post by mysterydip »

Declanomous wrote: post #49
peterburkimsher wrote: post #24

Earlier quoted context omitted.

Selling it after was a good idea - I built my own iPod Video by fixing broken iPods for friends, and didn't need the Nano in the end. After a few years I gave it to a kid at church in Shenzhen. However, I did find a way to convert UBS KeyClub points into cash. They're a loyalty-card system similar to frequent flyer miles, and are worth 1 CHF per point. When my friends visited Geneva, we planned to spend the points in…

Buying a cheese fondue is the most Swiss thing about this story. Cheese fondues were a fad in the US before I was born, and I know a lot of people's parent's who own them and use them maybe once every 5 years.

There's a chain of restaurants called The Melting Pot which does fondue entrees and desserts. Not something we do regularly, but it's an interesting niche.

Re: A rogue Romanian economist legally gamed the lottery

#64

Post by ggm »

delinka wrote: post #62
ggm wrote: post #59

The investors — small business owners, machine operators, housekeepers, and doctors — had been regaled with tales of riches, and promised participation in up to 9 lottos per year. Yet, they’d only received a $1.4k return on their $4k investment. Folks: thats > 25% return on investment. I'm sorry but my sympathies with these investors walked out the door at this point: If you can get 25% ROI, stop looking for more.

Is that $1.4k in addition to getting their $4k back? I always assume that with lotto-based shenanigans, the "return" isn't actually a profit, but the maximum of payouts after having bought all the chances their money could buy. I'll spend $20 on tickets for a large jackpot, and I'll will $2 on occasion - that's not a "10% return" but a "10% refund," and I'd expect a non-finance journalist to get that wrong.

Oh I totally misread it (or read it the other way). If its a loss of 3/4 of their investment, thats a poor investment indeed.

Re: A rogue Romanian economist legally gamed the lottery

#65

Post by paulie_a »

bryanlarsen wrote: post #2

AFAICT, many jackpot style lotteries get an expected value (EV) above 1 when the jackpots get big. They're set up so their average EV is 0.4 - 0.5, but when a jackpot isn't won, the payout is under 0.1. String a bunch of those together in a row, and the EV creeps above 1.0. The calculations are easy to do. You do need to estimate the number of people who buy the tickets so you can calculate the odds of sharing the ja…

The funny thing is you don't need any stats to win smaller amounts of money. Just the simple question "hey what's the newest 10 dollar ticket" was enough to result in a solid net positive and a lot of beer money in college. They tended to front load the winning tickets for the newest ones.

Re: A rogue Romanian economist legally gamed the lottery

#66

Post by grkvlt »

eximius wrote: post #7
bryanlarsen wrote: post #2

AFAICT, many jackpot style lotteries get an expected value (EV) above 1 when the jackpots get big. They're set up so their average EV is 0.4 - 0.5, but when a jackpot isn't won, the payout is under 0.1. String a bunch of those together in a row, and the EV creeps above 1.0. The calculations are easy to do. You do need to estimate the number of people who buy the tickets so you can calculate the odds of sharing the ja…

While true, expected value isn't necessarily a useful metric at that point. If I have a one in a googol chance of winning a googolplex dollars, it doesn't really matter that the expected value is going to be huge, I still won't win anything because I'll be insolvent before the requisite number of tries to have a reasonable chance of winning.

True, +EV is useless if the variance is huge, as is the case with lotteries.

Re: A rogue Romanian economist legally gamed the lottery

#67

Post by grkvlt »

solotronics wrote: post #14
eximius wrote: post #7

Earlier quoted context omitted.

While true, expected value isn't necessarily a useful metric at that point. If I have a one in a googol chance of winning a googolplex dollars, it doesn't really matter that the expected value is going to be huge, I still won't win anything because I'll be insolvent before the requisite number of tries to have a reasonable chance of winning.

thats why the people who do this work as a company and pool their resources

It's more that the people who do this do more than just buying a single ticket with positive expected value - as described in the article.

Re: A rogue Romanian economist legally gamed the lottery

#68

Post by dc_gregory »

socratewasright wrote: post #60
peterburkimsher wrote: post #56

Earlier quoted context omitted.

These days I'll take anything short-term, even remote. For a long-term career I have the education & work experience prerequisites for New Zealand's Skilled Migrant Category, Australia's 186, and Canada's Express Entry. In the past, I did two remote contracts (Pixelgarde and AnswerTo), but in both cases the employer reached out to me first. I'm not really sure how to find jobs. My résumé is here: http://peterburk.fre…

I’m much younger and less experienced, so what I’m going to say could be irrelevant, but your resume seems too busy. I’d cut it to 1 page, remove all the symbols, flags and logos. I’d also remove most of the extra stuff (personal interests, volunteering, objective, references). Essentially, almost anything that doesn’t show that I’m a very talented engineer should go. Also, I’d consider using latex if not already and…

Your advice is on point; I would find this resume very difficult to skim (and very easy to skip), need to treat it like a landing page, and distil the important parts.

Re: A rogue Romanian economist legally gamed the lottery

#70

Post by cycrutchfield »

femto113 wrote: post #61
bryanlarsen wrote: post #25

Earlier quoted context omitted.

Actually, the spreadsheet assumes that nobody is undertaking the buy-every-ticket strategy, it is calculating the EV for a single ticket. In scenario #1, there are 1.93 tickets sold for every possible combination, meaning that on average, 1.93 people win the jackpot. If you go ahead and buy every ticket, that means 2.93 tickets per combination, reducing EV from 1.11 to 0.78.

Because of the payout model (all and only winning tickets split a fixed prize) the EV for buying multiple randomly distributed tickets and uniformly distributed tickets aren't the same. Consider if you were the only one playing a lottery with 100 combinations. If a ticket costs $1 and the jackpot is $100 one random ticket has an EV of $1. However if you buy 100 random tickets on average you'll only cover about 64 num…

Who in their right mind would buy 100 tickets chosen at random _with replacement_ in your scenario?
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