To hedgers: Adding insult to injury
 

If you hedged the Mansion Steelers bet, you lost. I'd like to point out that most people who hedged did so incorrectly.

If your bankroll can't take a favorable (5% edge) coinflip for $500, even after you are handed $500 by the generous folks at Mansion, then betting about $525 to win $475 locks in a win of about $475, and may be better than not hedging at all. However, it's almost impossible for that hedge to be optimal.

Suppose you believe the game is really 50:50. Imagine you start from the position of hedging 100%, with a sure win of about $475. Reducing your hedge bet by $110 is the equivalent of betting $100 to win $110. That's a good deal for you if your bankroll is at least $4500, assuming a conservative level of risk tolerance (Kelly fraction greater than 1/4), though it might not be optimal for you. With a bankroll over $450, you can at least afford to reduce the hedge by $11, risking $10 to win $11.

The first half of the full hedge gives you 3/4 of the value, while the last half gives you 1/4 of the value. So, in some sense, the last half is 3 times as expensive as the first half. If you weren't sure whether to hedge, it was probably optimal for you not to hedge anywhere close to 100%, since the last half of the hedge should have been a bad deal for you.

That said, the difference isn't huge. On average, the mistake from hedging too much costs less than the juice on the entire hedge, about $50, and for most people it would be significantly less.

Re: To hedgers: Adding insult to injury
 

Thx for starting another Mansion thread, I got worried there might not be another new one this hour.

Re: To hedgers: Adding insult to injury
 

dont get cocky, i wanted top hedge more than 10% but didnt cause of line change.

alot of those that hedged got bonuses at other books or kickbacks from sites to cover your $50 you think they lost.


in the end...us non hedgers got lucky as hell

Re: To hedgers: Adding insult to injury
 

I won $840 vs. $890 if Miami won. I must suck because I gave up $160 so that I guaranteed $840. Hedging sucks. Not...I was 1 unlikely interception from seeming like a genius. $160? I could give a [censored]. $840? Very nice.

Re: To hedgers: Adding insult to injury
 

explain how you hedged and still guaranteed 840

Re: To hedgers: Adding insult to injury
 

YEAH OMG AND PLZ PM ME WITH REFERRALS.

Re: To hedgers: Adding insult to injury
 

As posted elsewhere, I came in at the exact right time, took advantage of the Casinocashulimited $250 bonus (no referral needed, but entering DaveyG013 would be nice if you do sign up) and I got this...

[ QUOTE ]
$1100 at Mansion and $550 ($500 cash+$50 bonus) at Sports Interaction with Pick on each side at both places gets you (assuming -110 payment on bets and disregarding the unlikely Tie that leads to a push):

Pittsburgh Win:
+1000 on Mansion
+90 signup bonus through Pokersavvy
-500 on SI
+250 from CCU
------
+$840



Miami Win:
+0 on Mansion
+90 signup bonus through Pokersavvy
+550 on SI (you will get the $500 win and the $50 signup bonus)
+250 from CCU
----
+$890

[/ QUOTE ]

Now, I've already withdrawn my Mansion money (minus $100 that I'll donk off there as appreciation) and need to wait on Pokersavvy and CCU to fulfill the rest.

Re: To hedgers: Adding insult to injury
 

[ QUOTE ]
Hedging sucks. Not...I was 1 unlikely interception from seeming like a genius.

[/ QUOTE ]
It sounds like you missed the point. Hedging might be right for you (and I seriously considered hedging), but hedging close to 100% is unlikely to be right for any advantage gambler. Did you choose hedging so much because it was better than not hedging, or because you considered and rejected all smaller hedge amounts?

Re: To hedgers: Adding insult to injury
 

SI is sports interaction correct?? what is CCU.

didnt do what you did but would like to in the future:)

Re: To hedgers: Adding insult to injury
 

[ QUOTE ]
I won $840 vs. $890 if Miami won. I must suck because I gave up $160 so that I guaranteed $840. Hedging sucks. Not...I was 1 unlikely interception from seeming like a genius. $160? I could give a [censored]. $840? Very nice.

[/ QUOTE ]

You gave up $250. Us non-hedgers also got the $90 Mansion referral bonus, for a total win of $1,090.

Re: To hedgers: Adding insult to injury
 

pzhon, it was EV to hedge if you got a nice kickback or sign up bonus elsewhere with the same line or better... end of story.
we got lucky as F*ck with a pick 6 when miami had 0 timeouts

Re: To hedgers: Adding insult to injury
 

[ QUOTE ]
SI is sports interaction correct?? what is CCU.

didnt do what you did but would like to in the future:)

[/ QUOTE ]
I've been less than impressed with SIA so far. I deposited $900 today so that I could work through the referral bonus over the next week or two. The $900 was deducted from Neteller, but never showed up in my SIA account balance. Their Live Chat is disabled, I can't get through to phone support, and I've received no response to my e-mail...

Re: To hedgers: Adding insult to injury
 

Why would somebody who would never bet more than $5 on sports, want to risk not winning $500 or whatever the amount was on the game, when the almost worst scenario almost happened.

Which is, pittsburgh with a 9-11 point lead playing prevent defense, and allowing Miami to score a meaningless touchdown.

After luckboxing two scores to even get it to a win for -4.5 and -5 bettors, that could have easily happened.

That's why I don't bet on football in the first place, and why a hedge, especially with the Rothlisberger getting hurt was the right move for a lot of people.

Re: To hedgers: Adding insult to injury
 

[ QUOTE ]
pzhon, it was EV to hedge if you got a nice kickback or sign up bonus elsewhere with the same line or better... end of story.

[/ QUOTE ]
Oh, and those +EV sign up bonuses elsewhere couldn't have been used at any other time, and required you to bet exactly what was needed to hedge 100%? What an unbelievable coincidence. I thought most of you had made a common, understandable error, and instead you were all optimizing perfectly. My bad; carry on. <font color="white">When was the last time someone admitted being wrong on the internet? </font>

Re: To hedgers: Adding insult to injury
 

smak, you should get together with FeltBelt. You two would be perfect for each other.

Re: To hedgers: Adding insult to injury
 

[ QUOTE ]
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pzhon, it was EV to hedge if you got a nice kickback or sign up bonus elsewhere with the same line or better... end of story.

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Oh, and those +EV sign up bonuses elsewhere couldn't have been used at any other time, and required you to bet exactly what was needed to hedge 100%? What an unbelievable coincidence. I thought most of you had made a common, understandable error, and instead you were all optimizing perfectly. My bad; carry on. <font color="white">When was the last time someone admitted being wrong on the internet? </font>

[/ QUOTE ]

not everyone bets or whores sports books....chill out bro.

we got lucky, end of story

ps. do you grind black jack bonuses at $1 per hand too..lol

Re: To hedgers: Adding insult to injury
 

[ QUOTE ]
Why would somebody who would never bet more than $5 on sports, want to risk not winning $500 or whatever the amount was on the game, when the almost worst scenario almost happened.

[/ QUOTE ]
Normally, you don't bet on sports because you risk $11 to win $10. It takes a lot of skill to beat that. Here, there was an opportunity to risk $10 to win $11 by reducing the size of your hedge. That should be sufficient reason for almost all advantage gamblers to hedge less than 100%. Some should hedge 0%, some 20%, some 80%, but almost none should hedge 100%.

Re: To hedgers: Adding insult to injury
 

[ QUOTE ]

we got lucky, end of story


[/ QUOTE ]
"End of story" does not mean what you think it does.

This isn't about luck. It's about making the right decisions. Almost all of the people who hedged 100% did not make the right decision, win or lose. They chose a +EV strategy that had a lower expected value than incomplete hedging (or betting even more on Miami, if they felt betting 11 to win 10 was favorable).

I'm willing to bet that your choice of Ed Miller, David Sklansky, Mason Malmuth, or BruceZ would agree with me.

[ QUOTE ]

ps. do you grind black jack bonuses at $1 per hand too..lol

[/ QUOTE ]
Of course not, and I don't see why you think I would. The people who do are generally making serious mistakes, skipping other bonuses and life to reduce variance a tiny bit. That shares some similarities with the mistake I am criticizing, paying too much to hedge 100%.

Re: To hedgers: Adding insult to injury
 

most of these people had never heard of or cared to hear of the books that offered bonuses + the kickbacks, so the hedge thread made it EV on that alone.

if someone whored every single sportsbook and reload you're theory is correct if someone has the risk tolerance for a $500 coin flip.

but alot of the people that hedged don't whore every single book known to man like you think....period......end of story

we got lucky bro

Re: To hedgers: Adding insult to injury
 

[ QUOTE ]

if someone whored every single sportsbook and reload you're theory is correct if someone has the risk tolerance for a $500 coin flip.


[/ QUOTE ]
I have explicitly stated several times that my objection is to hedging 100%, not to hedging at all. You can't have missed that. It is absurd to misrepresent what I am saying as applicable only to people willing to risk $500.

Don't pretend the only reason people hedged was for the promotions at other sportsbooks. If you hedge, of course you may want to take advantage of a bonus or other deal, but not hedging or only partially hedging here will not prevent you from taking advantage of those promotions. You should be able to see the value of better strategies without having exhausted the available promotions.

You are throwing out red herring after red herring, and repeatedly (and erroneously) declaring "end of story." Is this your attempt at an intelligent conversation? Either admit that I pointed out a simple mistake that many people made, or really end the story by giving up on the irrelevant complications and misrepresentations.

For many advantage gamblers, hedging 100% is better than hedging 0%. For almost none is hedging 100% better than both hedging 99% and hedging 101%. Many people hedged close to 100% without carefully considering better alternatives. This is a common error of advantage gamblers, even if it is uncomfortable for you to admit that it is an error.

Re: To hedgers: Adding insult to injury
 

lol I love how people who let it ride when the line was at -5/-4.5 talk about how the hedgers gave up EV

when the line moved to even hedging when it was -5/-4.5 was much much more +EV than letting it ride at -5/-4.5 was

nice suckout fish

Re: To hedgers: Adding insult to injury
 

My Hedge was actually + EV I got miami at +102. which means I bet 500 to win 510, So I would have won 500 or 510. EV = + $5...

Re: To hedgers: Adding insult to injury
 

What you are suggesting is that we should have predicted the line moving to even and hedged the bet more when it was -5/-4.5...

Re: To hedgers: Adding insult to injury
 

OP

you can't figure out what's optimal for others without considering their attitude towards risk

Re: To hedgers: Adding insult to injury
 

And you can't start this kind of thread without looking like a pompous ass. I didn't hedge, but I'm not so arrogant as to presume what was best for me is also best for everyone else.

Re: To hedgers: Adding insult to injury
 

[ QUOTE ]
[ QUOTE ]
pzhon, it was EV to hedge if you got a nice kickback or sign up bonus elsewhere with the same line or better... end of story.

[/ QUOTE ]
Oh, and those +EV sign up bonuses elsewhere couldn't have been used at any other time, and required you to bet exactly what was needed to hedge 100%? What an unbelievable coincidence. I thought most of you had made a common, understandable error, and instead you were all optimizing perfectly. My bad; carry on. <font color="white">When was the last time someone admitted being wrong on the internet? </font>

[/ QUOTE ]

I think pzhon is my favorite 2+2 poster.

The poster who just called OP pompous is ridiculous. He is pointing out an interesting hedging observation, one that many posters here probably missed. No where is he telling you exactly what to bet, as he notes that is dependent upon your risk tolerance level (3rd paragraph of OP).

Re: To hedgers: Adding insult to injury
 

If the Dolphins won and the Steelers didn't cover than somebody would start a thread about how anyone who didn't hedge was foolish for not hedging.

And where is the insult or injury? The hedgers who got their bets in on time make a profit of around $450+ and a bonus from another book along perhaps SIA ($250) risk free.

Interesting how people post things like this after the game after they know the outcome then everyone is an expert.

Re: To hedgers: Adding insult to injury
 

Once Rothlisberger got hurt it was impossible to hedge if you were already at Pitt -5. Once it dropped to 4, the juice was too much to make a hedge +EV.

Those of you counting your sign up bonuses and referrals at SIA as part of your hedge are misled. The rest of us will get those later as well.

Re: To hedgers: Adding insult to injury
 

[ QUOTE ]
lol I love how people who let it ride when the line was at -5/-4.5 talk about how the hedgers gave up EV

when the line moved to even hedging when it was -5/-4.5 was much much more +EV than letting it ride at -5/-4.5 was

nice suckout fish

[/ QUOTE ]

Ummmm, if I am Pitt -5, how does hedging with Miami +1 do me any good? I had planned on hedging, but I didn't expect the line change so quickly. To say we were stupid not to hedge once the line changed only shows how ignorant you are.

Re: To hedgers: Adding insult to injury
 

[ QUOTE ]
If the Dolphins won and the Steelers didn't cover than somebody would start a thread about how anyone who didn't hedge was foolish for not hedging.

And where is the insult or injury? The hedgers who got their bets in on time make a profit of $400 risk free.

[/ QUOTE ]

$400 risk free versus risking $400 to win $600. I'll take he effective +150 bet every day, especially when the book odds are -110.

Re: To hedgers: Adding insult to injury
 

Some people are possibly a little crazy...everyone made a risk/reward decision, everybody profited...can't we all get along.

Re: To hedgers: Adding insult to injury
 

[ QUOTE ]

I think pzhon is my favorite 2+2 poster.

The poster who just called OP pompous is ridiculous. He is pointing out an interesting hedging observation, one that many posters here probably missed. No where is he telling you exactly what to bet, as he notes that is dependent upon your risk tolerance level (3rd paragraph of OP).

[/ QUOTE ]

OP made an interesting and informative post on the EV of hedging this promotion. Unfortunately, instead of posting this a week ago when he could have helped the 2+2 comunity, he chose to wait until several hours AFTER the game to enlighten everyone on the value of hedging.

If he posts this a week ago, I thank him for his contribution to the forum. If he posts it when he did, I have to agree he's just being a pompous ass, bragging about what he knew all along.

Disclaimer: If he did post this a week ago, and the hedgers just ignored him and shouted him down, then its your own damn fault.

Re: To hedgers: Adding insult to injury
 

[ QUOTE ]
OP

you can't figure out what's optimal for others without considering their attitude towards risk

[/ QUOTE ]

I believe this to be the correct answer in the thread. I haven't read all responses, so others may have made similarly correct remarks. While maximizing EV is certainly one perspective and certainly a valid one, it is not the only valid one. Like econ_tim has pointed out, the "optimal decision" depends on both EV and attitude towards risk. If I have a 0% risk tolerance, I am hedging 100%, and that is the correct move for me.

I am not a stock trader nor do I think stock trading is gambling per se, but I like to use it as a comparative example. Startup company A's stock will often have an EV higher than that of an established company. Risk, however, is much higher. Which is the correct investment? The answer is, it depends. If I'm creating a short-term portfolio to fund my child's upcoming college education, I may choose the risk-averse, lower EV option.

Similarly, if I know that I need $500 for rent this month and I don't know if I will be able to make that money otherwise, I'm going to take the lower EV, 100% hedged bet to guarantee my rent will be paid on time.

Realize that this example isn't without its flaws, but it illustrates the importance of risk tolerance. EV can't be viewed inside a vacuum.

Re: To hedgers: Adding insult to injury
 

[ QUOTE ]


The first half of the full hedge gives you 3/4 of the value, while the last half gives you 1/4 of the value. So, in some sense, the last half is 3 times as expensive as the first half.

[/ QUOTE ]

This thread is kind of intriguing to me, although I hate seeing my 2+2 brethren argue over this kind of thing. OP, could you elaborate on the above quote from your original post? I understand the concept of your post (i.e., that a risk aversion that requires a hedge does usually not call for a full hedge) and I agree (or did I misunderstand?). I'm not sure exactly what you mean by the above quote however. How did you arrive at the 1/4 and 3/4 figures? (or where you choosing convenient figures to get a point across?)

Also, in the above quote, when you speak of "1/4 of the value" -- don't you mean "1/4 of the utility"? (as in "benefit"?). After all, I think we agree that one gains no actual "value" by hedging, but rather derives "utility" from reducing one's risk through a hedge. If additional action on the Pitt game added value, it wouldn't be a hedge, it would be arbitrage.

Anyways, I don't mean to be annoyingly technical with your word choice but rather inquire for my own edification. And I'd love to hear from you on how you arrived at the 1/4 and 3/4 figures referenced above.

Re: To hedgers: Adding insult to injury
 

[ QUOTE ]
[ QUOTE ]
lol I love how people who let it ride when the line was at -5/-4.5 talk about how the hedgers gave up EV

when the line moved to even hedging when it was -5/-4.5 was much much more +EV than letting it ride at -5/-4.5 was

nice suckout fish

[/ QUOTE ]

Ummmm, if I am Pitt -5, how does hedging with Miami +1 do me any good? I had planned on hedging, but I didn't expect the line change so quickly. To say we were stupid not to hedge once the line changed only shows how ignorant you are.

[/ QUOTE ]

no, the reason people hedged was to avoid situations like this - I didn't say people were stupid anywhere - learn to read please

hedging at -5/-4.5 was a choice people made - I have NO CLUE why the people that didn't hedge are getting so mad and rubbing it in the hedger's faces, especially since people getting it at -5/-4.5 lucked out hardcore

everyone won money who cares, seriously

Re: To hedgers: Adding insult to injury
 

pzhon, you are one of the few thinking about it the right way! But your numbers are a bit off.

advantage of reduced hedge is 0.05
standard deviation of reduced is 1.05
full hedge is 523.8 to win 476.2
(assume -110 and perfect hedge; e.g. -4.5 and +4.5 or -1 and +1.5)

neutral bankroll if only full or no hedge possible
is 5775 (full Kelly)
neutral bankroll if only full or no hedge possible
is 23100 (if believe in 1/4 Kelly)

(bankroll includes both the 1100 and the 476.2)

correct amount to hedge (full Kelly, 476.2 is full hedge)
BR hedge
1600 404
2500 363
4000 295
7000 159
10k 23
10.5k 0

If someone has a bonus at a book, then if it is not used for the hedge, then it can only be gotten by making other wagers (hence, more risk). But this is a tiny factor, assuming the bonus could be cleared by making a flock of tiny wagers.

The other possibility is if someone with quite limited funds needs to deposit for a bonus before the 476 will be realized. But people in that situation are the ones who will be wanting to hedge near the full amount anyway, so they should just deposit what they have and hedge with it.

Re: To hedgers: Adding insult to injury
 

[ QUOTE ]
[ QUOTE ]

you can't figure out what's optimal for others without considering their attitude towards risk

[/ QUOTE ]

[/ QUOTE ]
In fact, econ_tim, the type of analysis I performed is standard in economics, and it is easy to show that people are acting suboptimally without determining what is optimal. Recall the notion of Pareto efficiency in a related (but not identical) context.

I mentioned that for some people, a 0% hedge was appropriate, for some 20%, and for some 80%. For almost no one was a 100% hedge appropriate. I'm not telling you how much the optimal hedge was for you. I'm telling you that hedging 100% was almost certainly wrong, even if it was better for you than hedging 0%.

[ QUOTE ]
While maximizing EV is certainly one perspective and certainly a valid one, it is not the only valid one.

[/ QUOTE ]
It looks like you completely missed the point, and are attacking a straw man argument. I'm not saying hedging is never right, and I stated that I considered hedging here. The V of my EV didn't stand for money, but for utility. I'm saying that many people hedged the wrong amount after making a common error.

[ QUOTE ]
If I have a 0% risk tolerance, I am hedging 100%, and that is the correct move for me.

[/ QUOTE ]
No advantage gambler has 0 risk tolerance.

For an advantage gambler, hedging 100% is an inconsistent choice. I don't have to determine the right choice to point out that an inconsistent choice is wrong.

If you recognize that hedging 100% was wrong, but decided it was too much effort to do better, that's ok. Not noticing that hedging 100% was wrong indicates a conceptual error that is likely to be repeated. Being unable to admit that hedging 100% was wrong after it is pointed out and explained by a mathematician is just being dense.

Re: To hedgers: Adding insult to injury
 

[ QUOTE ]
[ QUOTE ]

The first half of the full hedge gives you 3/4 of the value, while the last half gives you 1/4 of the value. So, in some sense, the last half is 3 times as expensive as the first half.

[/ QUOTE ]
OP, could you elaborate on the above quote from your original post?


[/ QUOTE ]
In an expected utility context, there is something fundamentally quadratic about risk. Except in contrived situations, the cost of making a wager that is 2 times as large is about 4 times as great, at least for small wagers. Betting $100 on a fair coinflip is like making 10,000 $1 wagers.

More technicaly, let your utility function be V, normalize you initial bankroll to be 0, V'(0)=1 and V(0)=0, and consider the certainty equivalent of a fair coin-toss. For sufficiently small fair coin-tosses for $x, the expected value (utility) of the gamble is about
-x^2 V"(0)/2
~ V(- 1/2 x^2 V"(0)).

So, the certainty equivalent of wagering $x on a fair coinflip is about $-1/2 x^2 V"(0). That's the damage to our utility by wagering $x, expressed in $. The certainty equivalent of wagering $2x is about 4 times worse, $-2 x^2 V"(0). You should be willing to pay up to about $3/2 x^2 V"(0) to reduce the $2x bet to $x, but only about $1/2 x^2 V"(0) to reduce the $x bet to 0.

The first half of the hedge bet costs just as much as the second half of the hedge bet, but it gives you 3 times as much of an improvement in your certainty equivalent. The first 1/10 of the hedge bet gives you 19 times as much of an improvement as the last 1/10.

[ QUOTE ]

I understand the concept of your post (i.e., that a risk aversion that requires a hedge does usually not call for a full hedge) and I agree (or did I misunderstand?).


[/ QUOTE ]
That's it.

Also, people may see a +EV option relative to some base point, and choose it without considering whether this is the best option.

Re: To hedgers: Adding insult to injury
 

phzon,

you are wrong. the hedgers not only lowered their variance but also increased their EV quite significantly (over $200) through bonuses.

Re: To hedgers: Adding insult to injury
 

[ QUOTE ]
phzon,

you are wrong. the hedgers not only lowered their variance but also increased their EV quite significantly (over $200) through bonuses.

[/ QUOTE ]

Non-hedgers could get the same bonuses.