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The infamous coin toss

ergodicityeconomics.com

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Re: The infamous coin toss

#241

Post by x-complexity »

shove wrote: post #207
robertlagrant wrote: post #157

Earlier quoted context omitted.

Most people are rich because they own stock that's valuable, because they made or did something that's valuable. Collapse that chain and you replace value creation as a form of mild power with political ability as a way to access direct and high levels of power and things start going wrong fast[0][1][2]. [0] https://www.britannica.com/topic/Stalinism [1] https://en.wikipedia.org/wiki/Great_Leap_Forward#Consequence...…

The power that flows from value creation is “mild”, whereas the power that flows from political acumen is “direct and high”? Man cmon. Power is power. Have you not noticed the entire lobbying industry and who pays for the majority of it?

> The power that flows from value creation is “mild”, whereas the power that flows from political acumen is “direct and high”? Man cmon. Power is power. Have you not noticed the entire lobbying industry and who pays for the majority of it?

The difference between the two is the number of sources of said power.

The power that flows from value creation is “mild”, because there are many avenues/paths for creating value. Value creation is inherently derived from what at least one person sees as valuable in of itself, as thus less concentrated. The changes brought by said value creation is limited to the people that see its value & congregate around it, and when a better/more valuable creation turns up, their decision to leave or stay with the existing creation is ultimately theirs.

The power that flows from political acumen is “direct and high”, is because that power has the ability to control everyone's lives, and that there is only one place where said power is allowed to accumulate: The State. Power inherently concentrates when only one apparatus is allowed to accumulate power. This makes manipulations & corruption of that power much easier to perform, since it inherently concentrates into few hands/figures.

Re: The infamous coin toss

#242

Post by AtlasBarfed »

rerdavies wrote: post #64

Huh. So I wrote the code, and ran the simulation. Now I get it. Investors: 100,000 Iterations: 100 Average worth after 100 iterations: $83.923 Average net worth increases. However the distribution of wealth is skewed dramatically. Winners: 13,704 (net worth of more than $1 at the end) Investors worth What That Guy was worth (the investor who made the most money): $1,171,830.00 He flipped 71 heads and 29 tails. Median…

Okay, so aside from the cool terms (ergodicity, which... well whatever), what I think is really going on here is that the results of the iterative system, which intuitively appear to be a normally distributed value distribution for "not large" iterations, actually is NOT.

Since it is actually a very not-normal distribution, the typical concepts of "mean", "median", and "std deviation" (which AFAIK isn't even really mentioned and would be meaningful) are warped to the point of meaninglessness.

Of course economics being essentially a social science with some math and therefore defaults to thinking in typical normal distribution assumptions, won't naturally deal with that sort of pattern.

And while I agree game theory (and this is a game) is relevant to economic study, the fact is that real world "games" like wealth distribution has a vast chasm of chaos/randomness/nonlinearity that blocks things like this or the "pirate distribution" game and others.

Distrubingly, the games are parroted in some either overt or subvert manner to justify the distribution of wealth in the current 30 year era.

"It's the natural way of economics and mathematics, how dare you chop off my head in the guillotine!"

And yet "Some men want to watch the world burn". The elite also love the "great man" theory of history, because they are, of course, great men. But bring up the revolutionaries, and suddenly they don't like those pet ideas.

Re: The infamous coin toss

#243

Post by [deleted] »

robertlagrant wrote: post #237
Retric wrote: post #233

Earlier quoted context omitted.

You didn’t set the categories, the original post was: “Imagine if — on top of that - we let the undeserving rich invest their wealth in things such as: - owning media” You can have private ownership without the owners automatically being rich. Further the owners could be rich without qualifying as undeserving rich by whatever metric the post’s author had in mind. That said, thanks for providing my point ;-)

> You didn’t set the categories This whole conversation has been about my "false dichotomy" of state and private ownership. E.g. from LeonB: > I mean of course — who should own media.. we have precisely two choices, and no possibility to imagine anything else! What you’ve put forward is known as a false dichotomy. That is a situation where you present two options as if they are the only options.

[deleted]

Re: The infamous coin toss

#244

Post by Retric »

robertlagrant wrote: post #237
Retric wrote: post #233

Earlier quoted context omitted.

You didn’t set the categories, the original post was: “Imagine if — on top of that - we let the undeserving rich invest their wealth in things such as: - owning media” You can have private ownership without the owners automatically being rich. Further the owners could be rich without qualifying as undeserving rich by whatever metric the post’s author had in mind. That said, thanks for providing my point ;-)

> You didn’t set the categories This whole conversation has been about my "false dichotomy" of state and private ownership. E.g. from LeonB: > I mean of course — who should own media.. we have precisely two choices, and no possibility to imagine anything else! What you’ve put forward is known as a false dichotomy. That is a situation where you present two options as if they are the only options.

No, you used the words “Private people” in direct response to someone complaining about ownership of the media by the wealthy.

That’s not equivalent to all forms of non governmental ownership in that context. Charities are not owned by private people quite literally as they can’t liquidate assets etc. You can be convinced of Theft if you take assets from a charity you set up.

If you want to now redefine your point as all forms of non government ownership then that’s simply a strawman arguemnt in terms of the person you where replying to.

Re: The infamous coin toss

#245

Post by TheCleric »

x-complexity wrote: post #240
TheCleric wrote: post #175

Earlier quoted context omitted.

> Most people are rich ... because they made or did something that's valuable. This assumption is doing a LOT of heavy lifting here.

> > Most people are rich ... because they made or did something that's valuable. > This assumption is doing a LOT of heavy lifting here. Value is determined by the people. I personally find Pokemon & MTG cards to be worthless, but other people do, and they're where that value is derived.

This is a meaningless comparison. That's not how wealth works. Wealth can be acquired via tons of indirect means including fraud, monopoly, luck, etc.

Re: The infamous coin toss

#246

Post by daveFNbuck »

kgwgk wrote: post #210
daveFNbuck wrote: post #209

Earlier quoted context omitted.

I think the key thing you're missing here is that they were talking about behavior as the number of flips goes to infinity. That long improbable upper end becomes more and more improbable over time. As time goes to infinity, the probability of being in it goes to 0. With a finite population, everyone is ruined. I ran the same simulation as you. After 100 iterations, the richest one had $71. After another 1,000 iterat…

> With a finite population, everyone is ruined. With high probability.

With probability 1 as time goes to infinity.

Re: The infamous coin toss

#247

Post by kgwgk »

daveFNbuck wrote: post #246
kgwgk wrote: post #210

Earlier quoted context omitted.

> With a finite population, everyone is ruined. With high probability.

With probability 1 as time goes to infinity.

Right, the probability approaches one as time goes to infinity. I didn’t mean to imply otherwise.

Re: The infamous coin toss

#248

Post by Timon3 »

sobriquet9 wrote: post #203
eli_gottlieb wrote: post #180

Earlier quoted context omitted.

You have to have enough in the first place that trying to support yourself isn't betting 100% of your wealth.

If you have nothing in your checking account, it does not mean your wealth is zero. In real life you can earn more money, in the given example you can't.

In real life you can also have negative money. In real life you can live paycheck to paycheck. In real life you can have costs higher than your earnings.

Re: The infamous coin toss

#249

Post by DrScientist »

robertlagrant wrote: post #228
Retric wrote: post #181

Earlier quoted context omitted.

There is far more than just 3 options and suggesting any specific option is again falsely limiting the discussion. (1) Government ownership, (2) ownership by a single rich person, (3) ownership by a nonprofit, (4) ownership by the employees, (5) ownership by the readers… However, suggesting just one additional options focuses excessive attention to that specific option. Mentioning how much Twitter has changed going f…

(1) is state ownership; all the others are private. Those are the same two options I listed; you just mentioned some subcategories of private.

You are focusing on the wrong thing.

The danger in media control is not the public/private axis, but the monopoly/ plurality axis and the truth/falsehood axis.

Re: The infamous coin toss

#250

Post by jacknews »

kevinwang wrote: post #214
jacknews wrote: post #61

Earlier quoted context omitted.

It will only approach zero because you lose more than you gain. If the loser got 0.6666c instead of 0.6c, and the winner got $1.50, then over time you'd break even, on average. And yet the expected return would apparently be 1.08333. If think the conclusion is that 'expected return' is a fallacy, you just can't add proabability-outcomes in this way to get an 'expected outcome'.

> If the loser got 0.6666c instead of 0.6c, and the winner got $1.50, then over time you'd break even, on average. For what definition of "average"? Yes, the most likely outcome would be to break even. But if we mean "expected value" when we say average, then on average, that repeated wager would be massively profitable for us (in terms of wealth). Maybe a better way to view it is that it would be massively unprofita…

I think the conclusion is that 'expected value' calculated this way is a bogus metric, even for a single toss (what is the 'average' of a single toss, it already makes no sense). You can't simply take the mean average of summed probability-outcome products, or at least, it does not mean 'expected value', it means the 'probable limit' of the total.

In the $60/$150 bet the 'expected value' is $105, but no-one is getting $105. What is that number? It indicates a 'probable limit' to the total money in the system, but says nothing about what any individual should expect, or about the actual total size of the system, which will obviously tend towards the aggregate individual outcomes. And that is clearly exposed when you start repeating the bet.

In fact 'expected value' is quite clearly 0.6 * 1.5 = 0.9, ie $90, or I think more generally: (outcome-1 * probability-1 * ... outcome-n * probability-n) / (probability-1 * ... probability-n)

It's maybe counter-intuitive that the 'limit' of the system should keep growing, while the 'actual' size of the system tends toward the 'real' aggregate expected value, but I think it's much less counter-intuitive than what I think is claimed here, that repeating a bet turns it from being a 'good' bet to a 'bad' bet.

It was always a bad bet, just measured wrong.

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