Launch HN: Yotta Savings (YC S20) – Behavioral psychology to help people save • Hacker News Board

Re: Launch HN: Yotta Savings (YC S20) – Behavioral psychology to help people save

#171

Post by adammoelis » Thu, Jul 09, 2020, 8:56 PM UTC

abalaji wrote: post #169

Copying and pasting a note I wrote when I cam across this on Twitter [1] For the sweepstakes aspect, not considering the splits for larger prize money, the expected value is ~ $0.02 for every $25 you put in. The APY here seems to be 0.2% which seems to be lower than Ally which offers 1.1%. Though, the aim seems to be to “gamify” baking. [1] https://twitter.com/adithya_balaji/status/127593565571819521...

This excludes any value from prizes, which is the bulk of the value of Yotta. 0.2% is what you get if you never win a prize, ever.

Re: Launch HN: Yotta Savings (YC S20) – Behavioral psychology to help people save

#172

Post by llamataboot » Thu, Jul 09, 2020, 9:00 PM UTC

I really like this idea, and I can see where you could essentially function as a bank (make money off the deposits while paying out less than that in the EV of all winnings) as long as you are prepared to take any hit of variance (obviously not much variance in your prize structure though, especially with the big jackpot being pretty much in the realm of impossibility territory)

For those of us that enjoy variance - I wonder if you could make it so we could generate our own payout structure than could never get above what you are setting as "EV API"

Based on my back of the envelope calculations you are still running at less than 1% API, but I could be wrong (still need to run the exact numbers)

I'm not sure exactly how the legality works, and I understand that you need to make your money, but I do think it is an interesting (if not an MVP) option to allow advanced users to tinker with the amount of variance - perhaps I want to support your project in encouraging better savings but I want closer to no variance, perhaps I don't care about 1% a year but I want the chance of something more life changing...

Re: Launch HN: Yotta Savings (YC S20) – Behavioral psychology to help people save

#173

Post by adammoelis » Thu, Jul 09, 2020, 9:05 PM UTC

llamataboot wrote: post #172

I really like this idea, and I can see where you could essentially function as a bank (make money off the deposits while paying out less than that in the EV of all winnings) as long as you are prepared to take any hit of variance (obviously not much variance in your prize structure though, especially with the big jackpot being pretty much in the realm of impossibility territory) For those of us that enjoy variance -…

That's really interesting. Something basic we could do is allow users to toggle between getting a guaranteed return or more tickets. It wouldn't change the payouts, but it would change your own variance. It's not as flexible as what you describe though. Will think more on this.

Re: Launch HN: Yotta Savings (YC S20) – Behavioral psychology to help people save

#174

Post by abalaji » Thu, Jul 09, 2020, 9:15 PM UTC

adammoelis wrote: post #166

davidclark22 wrote: post #158

Earlier quoted context omitted.

First off, very cool idea. I'm a fintech PM and had the idea to build something similar. Glad to see someone doing it! From my research, it sounds like, because prize linked savings accounts are so new in the US, it's unclear whether requiring someone to have an account would count as consideration. By offering an AMOE are you taking a conservative position on this until it's more clear? Or, has a judge/court ruled o…

Yes you're spot on. We are taking the conservative approach for now by operating as a sweepstakes. We haven't had any issues with mail-in entries. I suspect because in our case the EV of a single entry for a single week is less than the postage cost.

Haha I did the math on this for that exact reason. I guess it only makes sense if you live in New York and can walk by the mailing address.

Re: Launch HN: Yotta Savings (YC S20) – Behavioral psychology to help people save

#175

Post by henryfjordan » Thu, Jul 09, 2020, 9:15 PM UTC

adammoelis wrote: post #11

francescopnpn wrote: post #7

How much does the insurance cost? Was it hard to find someone wiling to insure that? Finally, you pay 0.2% but Ally pays 1% yet you say your rates are as good.

On the interest rate side, the 0.20% is the base rate. If you win no prizes, you get that. Prizes comprise the bulk of the value from Yotta. Your total return is prizes + the base rate. On the insurance side, there are specialty insurance companies that do this kind of thing, similar to hole in one prizes or half court shot prizes at sporting events. We pay them a mark-up on expected value. Since the risk they're tak…

Why bother insuring yourselves then? Just to cover yourselves incase you get "unlucky"?

Couldn't you structure the contest so that you know you'd payout $X per week and not need insurance?

Re: Launch HN: Yotta Savings (YC S20) – Behavioral psychology to help people save

#176

Post by abalaji » Thu, Jul 09, 2020, 9:16 PM UTC

adammoelis wrote: post #171

abalaji wrote: post #169

Copying and pasting a note I wrote when I cam across this on Twitter [1] For the sweepstakes aspect, not considering the splits for larger prize money, the expected value is ~ $0.02 for every $25 you put in. The APY here seems to be 0.2% which seems to be lower than Ally which offers 1.1%. Though, the aim seems to be to “gamify” baking. [1] https://twitter.com/adithya_balaji/status/127593565571819521...

This excludes any value from prizes, which is the bulk of the value of Yotta. 0.2% is what you get if you never win a prize, ever.

I might get around to doing the math myself, but what would be the APY given the expected earnings I calculated above with an average American savings account of say $7,000.

Re: Launch HN: Yotta Savings (YC S20) – Behavioral psychology to help people save

#177

Post by CJefferson » Thu, Jul 09, 2020, 9:31 PM UTC

glern3692 wrote: post #143

CJefferson wrote: post #12

The grand prize of $10,000,000 will be paid out as... $5,800,000? I don't understand how you justify saying (as far as I can tell) "The grand prize is $10,000,000. We reckon you could invest $5,800,000 and make $10,000,000 in 40 years, so we will give you $5,800,000 instead".

I’m a little confused why that is relevant. Is there any payment in life that isn’t taxed? When you interview for a job, and the salary is 100k, should they advertise it as 70k?

This isn't tax, you'll still have to pay income (or whatever) tax on the $5,800,000. This is them deciding to give you less money, and claiming with careful investment you could make $10,000,000 over the next 40 years.

Re: Launch HN: Yotta Savings (YC S20) – Behavioral psychology to help people save

#178

Post by adammoelis » Thu, Jul 09, 2020, 9:35 PM UTC

davidclark22 wrote: post #162

adammoelis wrote: post #47

Earlier quoted context omitted.

The insurance company we work with that is responsible for paying out the jackpot prize draws the winning numbers. They have no access to the numbers users have selected, so it's completely blind.

I'm curious what kind of controls you have in place to ensure that the company choosing the numbers doesn't have an employee go rogue like what happened with the McDonald's Monopoly game. https://en.wikipedia.org/wiki/McDonald%27s_Monopoly#Fraud

Only two people at the insurance co. know the numbers, so the knowledge is limited. This helps because less chance of a bad actor being involved if the info is limited to a very small circle.

We would be able to spot anomalies over time in number of winners of high prizes vs. what the probabilities say, and we would investigate it if anything looked off or suspicious.

We also carefully vetted the insurance co. and the people there that we work with.

These don't eliminate this risk entirely of course, but they help mitigate it.

Re: Launch HN: Yotta Savings (YC S20) – Behavioral psychology to help people save

#179

Post by zomglings » Thu, Jul 09, 2020, 9:44 PM UTC

clairity wrote: post #133

zomglings wrote: post #61

This is an awesome idea, and I intend to try it out. I am a mathematician, and at the same time I can't resist the temptation to purchase the occasional lottery ticket. What most people miss about the lottery is that there can be utility to variance - the opposite of ennui. Have you guys read The Lottery in Babylon https://en.wikipedia.org/wiki/The_Lottery_in_Babylon

incidentally, you’re describing a key limitation of economic systems, whereby value as represented by price doesn’t reflect holistic utility to infinitely-complex humans and human societies. it’s true of basically everything, including stocks (efficient markets and all that), and forms the basis of a material critique of laissez faire capitalism.

This is interesting.

The way I understood the work of von Neumann and Morgenstern on game theory, there is an extensive discussion of utility and the derived ordering on preferences.

I interpret recent work on behavioral economics as building on their work to call into question the claim that one can easily estimate such a utility function for an economic agent in a manner invariant to the internal state of that agent.

This train of thought seems like it should leave laissez faire capitalism in the dust.

Re: Launch HN: Yotta Savings (YC S20) – Behavioral psychology to help people save

#180

Post by borisandcrispin » Thu, Jul 09, 2020, 9:55 PM UTC

Some years ago I built a digital piggy bank to help people save money automatically. The psychology behind the product is really hard. The biggest challenges is that you only see the value of saving money after a long time. Everybody knows they should do it, but it's easier to postpone as it's painful and hard to do in a daily basis.

Yotta solves this with an amazing approach. You get the long term reward of saving money at the some time that you get the exciting possibility of winning a short time reward. It's genius.