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Missing the point. I didn't say "Leader is a slimeball and will probably play like a spew hoping to run it up on a freeroll" I said the structure promotes this. There are lots of ways to structure a stake that doesn't do this. A very simple example is that (assuming you play 5/10 now) you play 10/20 and Veganmav takes half your action. If you need initial money to play you borrow it from him. Your hourly rate drops a bit because your edge is probably bigger at 5/10 but you gain the experience, Veganmav's profit/incentive is obvious, and you share the risk.
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The problem with this logic though is that lending me money is incentive for me to just keep it. I mean if someone going to be devious about it, that's a much simpler way no? So if your going to trust someone that far you mid as well trust them to play the best they can. In any case, I do understand your point, but I'm not sure if you understand mine. Whatever the structure encourages, you should only stake people you trust to do the right thing.
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Any staking deal is better for the backer than the horse because the horse could probably achieve the same hourly at a lower limit unless he is totally busto. If you want to do the deal to gain mid limit experience than you sacrifice the hourly in order to do that. Maybe we need to understand the motivations of you both in order to structure it better.
-DeathDonkey
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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.