Re: YARPT
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Doesn't that logic imply that you should be able to book an automatic win by selling both HOUSE.DEM.2008 and HOUSE.REP.2008, which together total less than 90?
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Depending on the vig intrade charges, yes, it does.
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Assume for simplicity that:
HOUSE.DEM.2008 = 80
HOUSE.REP.2008 = 10
Now if each of these were actually the actual percentage (a bit repetitive and redundent, I know), then your EV calculation to sell would be:
Sell Dem, put up 20 to win 80. Win 80 20% of the time, lose 20 80% of the time.
Sell Rep, put up 90 to win 10. Win 10 90% of the time, lost 90 10% of the time.
EV = 0 in both cases.
Now given that the total is only 90, there is 10% to be allocated somehow. Let's assume the actual percentages are 85% and 15%. Then your EV is:
EV(Sell Dem) = 80(0.15) - 20(0.85) = -5
EV(Sell Rep) = 10(0.85) - 90(0.15) = -5
And in fact you can see that no matter how you allocate the extra 10% you get a total EV betting both ways of -10.
Looks like a guaranteed loss to me, not a win.
I.e. your point remains but the guaranteed win should be to buy, and not sell both sides, right?
EV(Buy Dem) = 20(0.85) - 80(0.15) = +5
EV(Buy Rep) = 90(0.15) - 10(0.85) = +5
Or am I screwing the pooch somewhere obvious?
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