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The infamous coin toss

ergodicityeconomics.com

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Re: The infamous coin toss

#191

Post by LeonB »

Swenrekcah wrote: post #187
LeonB wrote: post #161

Earlier quoted context omitted.

Um ok. Backing up a little and answering your next question. The naivety is that you say “I know vat is regressive but if it’s a low amount…” Ok. First thought I had here was: What a middle class person considers a low amount of tax on a necessity is not the same as what a poor person considers a low amount of tax on a necessity. At that point - just pondering that, which is only a preliminary consideration, I think…

Ok thanks for that perspective. To answer your point, the thing about prices and taxes is that the price will be basically whatever the market will pay. It is not determined by the cost of service except at the lower end. So a low VAT (compared to no VAT) will come mostly out of the profits and not so much from a price increase. This is especially true when the current situation is in most places that there is a rath…

> the price will be basically whatever the market will pay

I too am optimistic that markets can work and there are situations where the price will be what the market will pay.

But what I observe is - from the consumer side: a rapid rise of monopolies

From the producer side: an even more rapid rise of monopsonies (this is the sneakier consequence of monopolies that most of us don’t see, but which affects us most)

Those two items damage the premise of free markets

But add this:

From the government pov - these companies are beyond taxation: they can shift profits off shore and or manipulate tax policy such that the playing field is no where near level.

Re: The infamous coin toss

#192

Post by robertlagrant »

LeonB wrote: post #183
robertlagrant wrote: post #167

Earlier quoted context omitted.

I don't know about options, but I was describing two main buckets you could classify things in, so...1ish? The irony of you determinedly pinning me down, when I'm happy to converse, while you will do anything but answer what I was asking, is hopefully not lost on you.

Apparently I will do anything but answer what you were asking. Your question was: >Who should own media? Private people, or the state? The reason why no one ought to answer a question like that is because it is presented in a format identical to a “bad faith” question. You may have meant it genuinely but it looks like the old “Have you stopped beating your wife?” lawyer trap. I chose not to answer the question becaus…

> Apparently I will do anything but answer what you were asking.

> Your question was:

> >Who should own media? Private people, or the state?

Well, no. My question was: can you give a third option?

> Then I explained my reasoning and so on.

You didn't explain your reasoning. You reiterated that it was too obvious to need to explain your reasoning, and left it as a claim.

Re: The infamous coin toss

#193

Post by robertlagrant »

LeonB wrote: post #188
robertlagrant wrote: post #184

Earlier quoted context omitted.

There was no argument. Only a claim. And ad hominem is attacking the person, not the argument (e.g. "They might say that, but they're a Democrat.")

You were claiming that I was being paid per word. That’s an “ad hominem” attack because it is against me. Please refrain from doing that to people, whether me or others.

> You were claiming that I was being paid per word.

Please quote where I claimed that.

Re: The infamous coin toss

#194

Post by robertlagrant »

Retric wrote: post #185
robertlagrant wrote: post #184

Earlier quoted context omitted.

There was no argument. Only a claim. And ad hominem is attacking the person, not the argument (e.g. "They might say that, but they're a Democrat.")

Claims are arguments, just poorly supported ones. Ad hominem includes many types attacks on a person that aren’t about the person but how they presented the argument. Ie mocking how slow someone spoke, or in this case how many words they used: https://en.wikipedia.org/wiki/Ad_hominem

This is the crux of it, and lines up with what I was saying:

> Nowadays, except within specialized philosophical usages, the usage of the term ad hominem signifies a straight attack at the character and ethos of a person, in an attempt to refute their argument.

Re: The infamous coin toss

#195

Post by LeonB »

dontlaugh wrote: post #179
LeonB wrote: post #107

Earlier quoted context omitted.

Agreed. I have friends that are plumbers and friends that own factories. Both plumbers and factory owners do indeed have opportunities to exploit people. But my plumber friend can only exploit one customer at a time, where as a factory owner multiplies that ability. Multiplication is a powerful operator.

The plumber generally exploits one or two employees. But otherwise your point stands.

I said “my plumber friend” so a generalisation about other plumbers is irrelevant to whether or not my point stands.

Re: The infamous coin toss

#196

Post by cubefox »

n2d4 wrote: post #190
cubefox wrote: post #168

Earlier quoted context omitted.

You should maximize the geometric EV, not the (usual) arithmetic EV. In your average calculation you took the arithmetic mean, but the geometric mean is relevant. (2.25 * 0.9 * 0.9 * 0.36)^(1/4) =0.9 Which is below 1! To test the geometric mean with the earlier example ("+100% is equivalent to -50%"): (2.0 * 0.5)^(1/2) =1, as expected.

Not quite; there's no such thing as a geometric EV (EV is by definition always arithmetic). Instead, you calculated the geometric growth rate, which the Kelly criterion would then maximize; but it doesn't maximize your average outcome. Try it; run a simulation, and you'll see what I mean! (Some guy already posted his results [1]) If you're curious, I wrote a fairly lengthy explanation in another comment [2] about why…

> Not quite; there's no such thing as a geometric EV (EV is by definition always arithmetic).

That depends on how you define it. The arithmetic mean is usually presupposed when talking about expected values, but the arithmetic mean is not the only mean, and in fact it is inappropriate to use in some cases, so arithmetic expected value is likewise not the only "expected value", and in fact inappropriate sometimes. So yes, talking about non-arithmetic EV should be just as common as talking about non-arithmetic mean, even though it isn't.

> Instead, you maximized the geometric growth rate, which is what the Kelly criterion does; but it doesn't maximize your average outcome.

Well, it doesn't maximize the arithmetic average, but it does maximize the geometric average. :P There is no point in assuming we have only one kind of average and one kind of expectation. A suboptimal common usage of terms can in fact be a hindrance to thinking straight. You use logarithms to keep talking about the arithmetic mean/average, but in my opinion logarithms just obfuscate the fact that we are in geometric mean territory.

Re: The infamous coin toss

#197

Post by n2d4 »

cubefox wrote: post #196
n2d4 wrote: post #190

Earlier quoted context omitted.

Not quite; there's no such thing as a geometric EV (EV is by definition always arithmetic). Instead, you calculated the geometric growth rate, which the Kelly criterion would then maximize; but it doesn't maximize your average outcome. Try it; run a simulation, and you'll see what I mean! (Some guy already posted his results [1]) If you're curious, I wrote a fairly lengthy explanation in another comment [2] about why…

> Not quite; there's no such thing as a geometric EV (EV is by definition always arithmetic). That depends on how you define it. The arithmetic mean is usually presupposed when talking about expected values, but the arithmetic mean is not the only mean, and in fact it is inappropriate to use in some cases, so arithmetic expected value is likewise not the only "expected value", and in fact inappropriate sometimes. So…

> That depends on how you define it.

I agree, this is a semantic discussion. I'm using Wikipedia's definition. https://en.wikipedia.org/wiki/Expected_value

Re: The infamous coin toss

#198

Post by Retric »

robertlagrant wrote: post #194
Retric wrote: post #185

Earlier quoted context omitted.

Claims are arguments, just poorly supported ones. Ad hominem includes many types attacks on a person that aren’t about the person but how they presented the argument. Ie mocking how slow someone spoke, or in this case how many words they used: https://en.wikipedia.org/wiki/Ad_hominem

This is the crux of it, and lines up with what I was saying: > Nowadays, except within specialized philosophical usages, the usage of the term ad hominem signifies a straight attack at the character and ethos of a person, in an attempt to refute their argument.

That doesn’t make the correct usage in this context wrong, or more importantly prevent what you said from both being a logical fallacy and simply rude.

I personally would have apologized a while ago, but you do you.

Re: The infamous coin toss

#199

Post by kgwgk »

bzax wrote: post #163
jakell wrote: post #33

Earlier quoted context omitted.

Great description of a framing I hadn’t considered before, thanks!

I should admit I'm being very generous to Peters here - I came to the conclusion that this is what he means only because the math of ergodicity ( https://en.wikipedia.org/wiki/Ergodic_theory#Ergodic_theorem... ) talks a lot about "except on a set of measure zero". He provides no explanation of how he moves from "the time average of values in a particular run of the process" (which is ergodicity) to "what does a typic…

Time flies when you're having fun but it was less than four years ago: https://www.nature.com/articles/s41567-019-0732-0

This quote tells you all you need to know about the author's ability to understand things:

"my second criticism is more severe and I’m unable to resolve it: in maximizing the expectation value — an ensemble average over all possible outcomes of the gamble — expected utility theory implicitly assumes that individuals can interact with copies of themselves, effectively in parallel universes (the other members of the ensemble)."

Re: The infamous coin toss

#200

Post by operator-name »

I think I've reached an understanding, but do correct me if I'm wrong.

    lim players -> inf
    mean wealth -> starting_wealth * (win_chance * (1 + win_gain) + lose_chance * (1 - lose_loss)^rounds)
So in their example case

    win_change = lose_change = 0.5
    win_gain = 1.5
    lose_loss = 0.4
    (0.5 * (1 + 0.5) + 0.5 * (1 - 0.4)) = 1.05
so on average the mean wealth increases as the number of rounds increases. Yet at the same time for a single player

    lim rounds -> inf
    wealth -> 0
As others have mentioned, this is because the win multiplier is 1 + win_gain = 1.5 whereas the loss multiplier is 1 - lose_loss = 0.6. This is more easily seen by comparing the log of the multiplier

ln(1.5) = 0.41 ln(0.6) = -0.51

For the game to be profitable, it must satisfy

ln(1 + win_gain) > -ln(1 - lose_loss) 1 + win_gain > 1/(1 - lose_loss)

So for a gain of 50% the loss must be less than 33.3%.

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