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Out of 15M brackets, none remains to win Warren Buffet's $1B March Madness bet

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Re: Out of 15M brackets, none remains to win Warren Buffet's $1B March Madness bet

#61

Post by curiouscats »

jmduke wrote: post #27
jw2013 wrote: post #22

Earlier quoted context omitted.

If these four teams are equally competent. Then you have 50% chance to choose each of three correct (2 final four games + 1 title games correctly). So the chance to win it all is (1/2)^3 = 0.125. Your expected return is $1B * 55% * 0.125 = $68.75M. Or if you prefer a single payout, $300M * 0.125 = $37.5M. So considering inflation for $68.75M is over 40 years, maybe your expected return is between 37.5M to 50M (idk ab…

I'd argue that your chance of winning the bracket (or, at least, a valuation of it) is much higher than that given your ability to predict all of the matches prior. (I don't think this would qualify as gambler's fallacy, though I'm welcome to counterarguments.)

It would also depend on what the situation was then. If you predicted this crazy team to exceed all expectations and make it to the final four and then lose, they could well be a significant underdog.

Buffet's offer of a buyout would be great. If not, at some point I would start betting big at vegas against my picks so I at least made some money if one busted my bracket.

Of course I am more likely to win the lottery (even though I don't play it) than I am to have to put my plan into action.

Re: Out of 15M brackets, none remains to win Warren Buffet's $1B March Madness bet

#62

Post by PhantomGremlin »

Afforess wrote: post #57
PhantomGremlin wrote: post #46

Assuming you could pick game winners with 80% probability, your odds of selecting a perfect 63 game bracket are less than 1 in a million. I.e. >>> .8 ** 63 7.846377169233378e-07 Even at 90%, your odds are little better than 1 in a thousand: >>> .9 ** 63 0.0013100205086376223 Needless to say, I didn't even bother entering.

What? You didn't take 1 in a million odds because? The challenge was free . I took the challenge (and lost). To dismiss the challenge because of the long odds is silly. You left a free lunch on the table.

Elsewhere in this discussion someone posted this link [1] which claims that

   Odds are that Buffett’s bracket isn’t worth your time,
   however. Having a 1-in-7.4 billion chance of winning a
   billion dollars is worth the equivalent of 14 cents.
   That’s before accounting for taxes
I understand why you entered. It's for the same reason people play the lottery. People value a large payoff much more highly than a small one, even if the odds are worse for the big payoff.

I.e. for many people it's not worth betting $2 for a 1:2 chance of winning $4. That won't be a life changing event. But people are willing to bet $2 for a 1:175,223,510 chance of winning perhaps $100,000,000, even though those odds are much worse. That's how Powerball makes money. BTW I do bet on Powerball once in a while.

In my case I figured it wasn't worth betting $0.14 (because I knew it would take more than that of my time) to win $1,000,000,000.

[1] http://fivethirtyeight.com/datalab/we-have-a-1-in-6001225228...

Re: Out of 15M brackets, none remains to win Warren Buffet's $1B March Madness bet

#63

Post by curiouscats »

creade wrote: post #25

It's not in the article but my guess would be that none of Warren Buffet's money was ever actually on the line. The last time Pepsi had a contest for $1 Billion, they bought insurance against someone meeting the conditions to win the prize. Who'd they buy that insurance from? Berkshire Hathaway. http://en.wikipedia.org/wiki/Pepsi_Billion_Dollar_Sweepstake...

Right, same deal this time as I remember reading about it. It is funny that Buffet gets most of the PR when Buffett's company is just making a fortune insuring against a very unlikely outcome. Normally the crazy people marketing the potential $1B payout (that buy insurance from some boring insurance company) would get the PR.

Re: Out of 15M brackets, none remains to win Warren Buffet's $1B March Madness bet

#64

Post by Glyptodon »

Afforess wrote: post #57
PhantomGremlin wrote: post #46

Assuming you could pick game winners with 80% probability, your odds of selecting a perfect 63 game bracket are less than 1 in a million. I.e. >>> .8 ** 63 7.846377169233378e-07 Even at 90%, your odds are little better than 1 in a thousand: >>> .9 ** 63 0.0013100205086376223 Needless to say, I didn't even bother entering.

What? You didn't take 1 in a million odds because? The challenge was free . I took the challenge (and lost). To dismiss the challenge because of the long odds is silly. You left a free lunch on the table.

I didn't enter because I got irritated at Yahoo hijacking my Google login to make a Yahoo account and then ask for my phone number.

Re: Out of 15M brackets, none remains to win Warren Buffet's $1B March Madness bet

#65

Post by disc »

Afforess wrote: post #57
PhantomGremlin wrote: post #46

Assuming you could pick game winners with 80% probability, your odds of selecting a perfect 63 game bracket are less than 1 in a million. I.e. >>> .8 ** 63 7.846377169233378e-07 Even at 90%, your odds are little better than 1 in a thousand: >>> .9 ** 63 0.0013100205086376223 Needless to say, I didn't even bother entering.

What? You didn't take 1 in a million odds because? The challenge was free . I took the challenge (and lost). To dismiss the challenge because of the long odds is silly. You left a free lunch on the table.

> You left a free lunch on the table.

You appear to be discrediting opportunity costs (could those 30 minutes of researching brackets be better spent doing something practical?) and privacy costs (I'm sure Buffet's entries required a certain amount of personal information.)

Re: Out of 15M brackets, none remains to win Warren Buffet's $1B March Madness bet

#67

Post by jowiar »

bluedevil2k wrote: post #18

A friend and I today discussed if you had a perfect bracket after the great 8 round, going into the Final 4, would you, and for how much, sell a stake in your bracket to hedge your money? The numbers, though it's a "billion $" bracket, that's actually $25M over 40 years, or an optional $300M single payout. In the US, you could expect about 55% of that after taxes, so $165M. There are 3 games left at the Final 4 game.

I would imagine most people would hedge at least one round earlier. A perfect bracket going into the elite 8 would have an expected value of ~1M after tax. Nobody would ride it past then. Of course, you end up running a 1/128 chance of being the unhappiest winner of a million bucks ever.

I actually think that if anyone had gotten through this weekend clean (48/48) the expected value is 9k pretax, and I think most would take that.

Re: Out of 15M brackets, none remains to win Warren Buffet's $1B March Madness bet

#68

Post by dingaling »

PhantomGremlin wrote: post #62
Afforess wrote: post #57

Earlier quoted context omitted.

What? You didn't take 1 in a million odds because? The challenge was free . I took the challenge (and lost). To dismiss the challenge because of the long odds is silly. You left a free lunch on the table.

Elsewhere in this discussion someone posted this link [1] which claims that Odds are that Buffett’s bracket isn’t worth your time, however. Having a 1-in-7.4 billion chance of winning a billion dollars is worth the equivalent of 14 cents. That’s before accounting for taxes I understand why you entered. It's for the same reason people play the lottery. People value a large payoff much more highly than a small one, eve…

> In my case I figured it wasn't worth betting $0.14 (because I knew it would take more than that of my time) to win $1,000,000,000.

People in work say this and it amuses me - as they then go on to say how they enjoyed an evening-in watching two films back-to-back.

In other words: your time should only be equated to money if you don't enjoy the task.

Re: Out of 15M brackets, none remains to win Warren Buffet's $1B March Madness bet

#69

Post by ryguytilidie »

fsk wrote: post #37
bluedevil2k wrote: post #18

A friend and I today discussed if you had a perfect bracket after the great 8 round, going into the Final 4, would you, and for how much, sell a stake in your bracket to hedge your money? The numbers, though it's a "billion $" bracket, that's actually $25M over 40 years, or an optional $300M single payout. In the US, you could expect about 55% of that after taxes, so $165M. There are 3 games left at the Final 4 game.

In an interview, Warren Buffet suggested that if someone was perfect at the Final Four, he'd offer to buy them out for the EV (or even half the EV). If you aren't already rich, you'd be an idiot to not take his offer. It pays for Warren Buffet to buy someone out for their EV, because that minimizes HIS risk. Even if the person refused the offer, Warren Buffet could go to Vegas and bet on the last couple of games, as…

Assuming each is a coinflip is not a reasonable assumption.
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