Whats the optimal hedge here? (survivor pool)
 

A friend has gotten down to heads up in our yearly NFL survivor pool. (sadly I've been out since like week 3). Anyway, he now has 1 man to beat to win a pretty decent sum of $2650. Obviously as we go in to this weekend he is looking to hedge his bet. We threw around some ideas, but I'm not sure what is the most optimal way to hedge. The obvious thought is to bet against his own pick.. Say $500. This guarantees him $500 if he blows the pool, at least giving him some return. The worst case here is that he wins his pick but so does the other guy, then he has just thrown away $500. So I was thinking maybe add a bet with his opponent to hedge this risk a bit.. Of course then that opens up the possibility that he wins the pool and loses both side bets. Assuming sum of the side bets is less than half the pool winnings I think its a +EV move. I think this is getting close to optimal, but I'm still not sure there isn't a better route... Other thoughts?

Re: Whats the optimal hedge here? (survivor pool)
 

You need to provide more details about how the Survivor pool works. Are all teams available? Does he or the other guy need to announce their pick first? Any info on which way the other guy is leaning, or if he'd be open to making a deal? There are a lot of contributing factors here.

Re: Whats the optimal hedge here? (survivor pool)
 

Ah right, very important info you remind me I forgot to add. The picks will be published prior to gametime after both people have picked.

So, he will have knowledge of his opponents pick when making side bets, but now when making his own pick.

All teams are now available to be picked (it was only use a team once, but this was abandoned at the of the regular season since people would be out of teams to pick).

Re: a deal, I don't think he has approached the other person. Lets throw out that option for this excercise, although I agree that that might very well be the best RL option.

Re: Whats the optimal hedge here? (survivor pool)
 

He could make martingale bets against his survivor picks.

If one of his survivor picks loses, he will win the cash from his martingale betting. If his survivor picks never lose, he will win/split the pool.

(If the pool carries over into next season, this doesn't really work. It works only if there is a finite maximum number of games.)

Re: Whats the optimal hedge here? (survivor pool)
 

Which teams does he have left and which teams does the other players in the pool have left?

Re: Whats the optimal hedge here? (survivor pool)
 

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Assuming sum of the side bets is less than half the pool winnings I think its a +EV move.

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It is not +EV from a gambling point of view. It might make him feel better and thus have some sort of life EV, but that is about it.

The key question in all this is what happens if your buddy and the other person both win this week and next. Are they forced to split? That makes a big difference in your hedging options. Generally speaking it sounds like his best option is probably to negotiate with the other person to split the winnings or at least split part of it and then play for the rest.

Re: Whats the optimal hedge here? (survivor pool)
 

Well, if he's planning on hedging, he should definitely pick one of the favorites. For simplicity's sake, let's say he chooses Denver. Then:

- If the other guy (opp.) also picks DEN, no need to hedge.

- If opp. chooses PITT then he has an easy hedge on the Steelers ML, or he could go for the middle with the spread, just a question of how much.

- If opp. picks Seattle or Carolina, he can hedge on either of those teams, with the added advantage that he can wait to see whether Denver won the first game, which will give him an idea of his possible nets, and adjust the hedge amount accordingly.

If you want to get into the math on the third scenario, it won't be too difficult. But those are his basic options.

Re: Whats the optimal hedge here? (survivor pool)
 

The BEST way to hedge this is to call the other guy and see if he wants to split. Or each take a $1000 save and play for the rest.