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Monte Carlo methods – Why it's a bad idea to go to the casino

easylang.online

101–110 of 170 posts

Re: Monte Carlo methods – Why it's a bad idea to go to the casino

#101
post #62

Earlier quoted context omitted.

Are you sure there is even a philosophical difference there? I'm still going to use a program to do the heavy lifting of calculating the errors. I'm happy to argue that there is no philosophical difference; if both approaches are feasible and take comparable amount of time to implement then one gets the exact answer to the question at hand and the other is a poor man's shortcut for people who aren't confident in thei…

I think the value is in checking assumptions - if the analytical approach assumes a normal distribution and then you do MCM and get a vastly different result then it is probably worth checking the assumptions made by the analytical model.

That is an inappropriate way of checking your assumptions. Assuming a normal is assuming a model (a model is a simplification of a situation by only considering the relative parts). Writing a simulation is also assuming a model, although the process is a lot less formal than traditional statistical regression.

If a modeler has assumed two different models of a situation and are getting vastly different results then that is evidence something is wrong, but it is also evidence that the modeler is out of their depth. It is not appropriate to fit two different models and then claim that the differences are delivering insight. The differences are revealing big gaps in the modelers understanding of key influences, rendering both models highly suspect. They should not be creating models, they should be putting more time into understanding the thing they are modeling.

There are times when a modeler would have two different models, but they should certainly not be surprised that they give different results. Indeed, they should be assuming two different models because they are going to give completely different results. There will probably be other edge cases, but in my experience they are rarer than people just making mistakes about where MCM is appropriate.

Re: Monte Carlo methods – Why it's a bad idea to go to the casino

#102
post #51

Earlier quoted context omitted.

You hit the nail on the head. If you simply play the pass-line and free-odds on craps, the house edge is extremely small. And yet, most people lose far more than predicted by the odds. The problem is exactly as you stated - people don't have a defined exit-strategy, and their implicit exit-strategy is to keep playing till they lose everything. Which is guaranteed to happen 100% of the time even if the house-edge was…

I don't usually gamble, when I do it is roulette. Easy rules ans I only play the probabilities. I also the approach you mentioned above, never more than say 20 bucks with maybe another 10 as hard reserve. Quit when I'm ahead by a factor of, again like you, roughly 2x. And playing smaller amounts, meaning not everything at once but reasonably high, provides enough entertainment gambling for at least an hour. So in the…

> enough entertainment gambling for at least an hour. So in the end, even if everything is lost, I had my fun.

I wonder what you find entertaining/fun about this. I've been to casinos a couple of times. The only parts I found entertaining were observing people and the free drinks.

Re: Monte Carlo methods – Why it's a bad idea to go to the casino

#103
post #83

I made an effort to download previous draws form my local lotto website [1] And parsed them and applied a montecarlo method to see: 1. If I could find an optimal way of playing the game to maximize my profits. 2. If I could find a bias towards certain numbers. The result was: 1. I found a way with 1/3 chance of winning big and paying back all expenses you played for the past 20 years. It is a significant investment a…

If you found no difference on number frequency, it's the uniform distribution, not normal (a.k.a. gaussian) distribution. AFAIK uniform distribution means any number is equally likely to be drawn, regardless of distance to your other picks. Just to check if I got that right: does that mean that playing 333333 and 666666 in a 6 digits lottery had a higher chance of winning that picking 333333 and 333334? If so, why? A…

Yes, I meant uniform distribution. My method was to give it a higher chance to have a lower gap between the numbers to see if it would make a difference within a montecarlo simulation and it did. So if you have say 16 slots and you need to choose four numbers, according to my simulation, highest likelyhood of winning is to spread out your numbers like [3 6 9 12] or [4 7 10 13] and lowest likelyhood of winning is to spread like [1 2 3 4] [2 3 4 5] all the time.

Not exactly sure why.

Re: Monte Carlo methods – Why it's a bad idea to go to the casino

#105
post #51
post #11

It's more complicated (worse) than this. That the house has a small edge only tells a small part of the story. When people go to vegas for a weekend, they might have a number in their head they are willing to gamble. If they dont, then that number is their bank account balance. Then they start flipping coins, and often they keep doing this until they go bust. They rarely cash out when up but they always lose when the…

You hit the nail on the head. If you simply play the pass-line and free-odds on craps, the house edge is extremely small. And yet, most people lose far more than predicted by the odds. The problem is exactly as you stated - people don't have a defined exit-strategy, and their implicit exit-strategy is to keep playing till they lose everything. Which is guaranteed to happen 100% of the time even if the house-edge was…

Can you explain what you feel playing a game that will always make you lose money no matter the strategies and anything else? Very curious

Re: Monte Carlo methods – Why it's a bad idea to go to the casino

#107
post #58

Earlier quoted context omitted.

This is a common misconception about why casinos win. That 'casinos have infinite bankroll so they cannot lose' isn't actually an argument because casinos have limited bankroll. If they would allow me to play a +EV game I can crush them even if they had infinite bankroll by varying my betsize. The 'random walk' argument only works for fixed bet size.

I actually made a simulation of this because it seems obvious - you can actually double your bet each time you lose, and this basically guarantees that you eventually win each time! Turns out, you have to go surprisingly high for this to be true/effective on the long run. And the casino will cut you off way below the limit (i.e. there's of course a maximum bet). Plus, with this strategy, each win is a small one... bu…

> I actually made a simulation of this because it seems obvious - you can actually double your bet each time you lose, and this basically guarantees that you eventually win each time!

This is the St. Petersburg paradox: https://en.wikipedia.org/wiki/St._Petersburg_paradox

Re: Monte Carlo methods – Why it's a bad idea to go to the casino

#108
post #48

Earlier quoted context omitted.

Yes -- this is what is commonly misunderstood about Martingale. What Martingale really does is change the probability distribution of outcomes to be heavily weighted toward winning a very small amount of money. You can, for a given number of plays, use Martingale to make the odds of winning greater than the odds of losing. However what you can't do, is change the expected value of that set of plays. So what you've re…

What's kind of funny is that lots of people talk about playing the Martingale, which is dumb, but no one ever talks about playing the reverse Martingale - which is also dumb and losing, but at least has what I'd argue is a more favorable outcome distribution. Basically, with a reverse Martingale you'll usually lose a moderate amount (which, I mean, is what you'd expect since...casino) but occasionally win a larger am…

[deleted]

Re: Monte Carlo methods – Why it's a bad idea to go to the casino

#109
post #51

Earlier quoted context omitted.

You hit the nail on the head. If you simply play the pass-line and free-odds on craps, the house edge is extremely small. And yet, most people lose far more than predicted by the odds. The problem is exactly as you stated - people don't have a defined exit-strategy, and their implicit exit-strategy is to keep playing till they lose everything. Which is guaranteed to happen 100% of the time even if the house-edge was…

Can you explain what you feel playing a game that will always make you lose money no matter the strategies and anything else? Very curious

Any game/activity that you have to join a club and pay a membership for (i.e. Golf, Tennis) and also play professionally would qualify, so a subset of entertainment, engagement, excitement, relaxation, thrill.

Re: Monte Carlo methods – Why it's a bad idea to go to the casino

#110
post #28
post #11

It's more complicated (worse) than this. That the house has a small edge only tells a small part of the story. When people go to vegas for a weekend, they might have a number in their head they are willing to gamble. If they dont, then that number is their bank account balance. Then they start flipping coins, and often they keep doing this until they go bust. They rarely cash out when up but they always lose when the…

All true, but also this article is about Monte Carlo numerical methods rather than actual casinos. "Flipping a coin until you get enough tails in a row" is a really good way to describe long term gambling, though. I'm gonna borrow that.

> "Flipping a coin until you get enough tails in a row" is a really good way to describe long term gambling

It's not. The correct way is saying 'flipping a weighed coin'. It can be weighed in or against your favor. If it is weighed in your favor, then you will never really have the 'until' part (i.e. get bust), if you also manage your bankroll wisely.

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