Re: Brian & Barry\'s prop bet
Seth,
Consider these two examples:
1) I flip a coin one hundred times. Every time it is heads I pay you $1, every time it is tails nothing happens.
2) I roll a 100 sided dice one time. If the dice lands on #7 I pay you $5,000. If the dice lands on any other number nothing happens.
The expected value in each situation is $50. The second situation has a higher variance (you will either win big or you will win small) where the first situation has less variance (your most likely payout will be close to your average payout) but there is no 'edge' in choosing one scenario over the other.
In this bet Brian has the coin flip and Barry has the dice but if the average of Sorel and Justin's skill is equal to that of Barry's skill then neither person would have an edge.
If you play poker it is very important that you understand this concept. It is also fairly important that you understand this concept just to get through life.
|