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The goal of the deal was for it to be +EV for both. You can do this mathematically though it's difficult. You get the staker's EV by multiplying the probability of a win times the staker's % of a win times the average win and adding that to the probability of a loss times the staker's % of a loss times the average loss. The staker's percentages are set by the parties. The probability of a win/lose is attainable using basic win rate calcs. The average win/loss is harder. You have to fine the mean of a truncated normal distribution. I found
this paper pretty helpful in grasping the basics.
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So based on all this statistical analysis the optimal staking deal is the one that knish offers Matt Damon after he goes busto?
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I was wondering how long it was gonna be till someone mentioned this.
Hey, man, let me stake you. Standard deal, you know.
Fifty percent of your winnings. If you lose, it's on me.
I'd just throw it away.
- You still got the truck? - Sure.
Come on.