To hedgers: Adding insult to injury

[E.Z.]

i've said twice now that OP is correct if bonuses aren't involved. his math was a little off at first but he has it right now.

his original post called out all hedgers. many people that hedged this game used bonuses at sites they never heard of and never cared to hear of. throwing out bonuses only works for someone that whores every book. and few if any whore every book for their 10% reload weekly bonuses.

if OP thinks many of the hedgers were all savvy sports whores then he needs to read those threads. cause there were some pretty newbie type questions from people that were making their 1st and perhaps last sports bet online.

[Ballers83]

I love it. I was going to hedge but I was too lazy to do it. Thank you procrastination

[Blowup Doll]

EZ, the hedgers did not get any bonuses that us non-hedgers couldn't get. In fact, if it's all about this game, then one could have hedged and rehedged at multiple sites for more bonuses. My wife hedged at SIA for the CCU $250 bonus and i countered that by putting another $500 on Pitt at yet another site. Not the best EV situation, but she did it without telling me first so i was stuck with what i had to work with. At least we got all the bonuses too though.

[E.Z.]

yes, but alot on the non-hedgers and hedgers will never take advantage of any sportsbook bonuses. much less all of them.

so the $25 they lost in EV was more than made up on bonuses they would of otherwise never used or even heard of.

[smak]

Somebody gives you and another guy $500. You have never played a hand of poker in your life, and never will again.

He gives you 55, and your opponent T9 suited.

He says, we can run this hand normally, winner takes all, or you can each leave with your $500.

What do you do? Is there a wrong answer?

[1huskerfan]

[ QUOTE ]
Somebody gives you and another guy $500. You have never played a hand of poker in your life, and never will again.

He gives you 55, and your opponent T9 suited.

He says, we can run this hand normally, winner takes all, or you can each leave with your $500.

What do you do? Is there a wrong answer?

[/ QUOTE ]

Of course there's a wrong answer.

[DWarrior]

[ QUOTE ]
What you are suggesting is that we should have predicted the line moving to even and hedged the bet more when it was -5/-4.5...

[/ QUOTE ]

I had 600 in neteller and 1500 on party. I hedged on Friday, then made the mansion bet on Monday when the line moved to even.

EV anyone?

[pzhon]

[ QUOTE ]
[ QUOTE ]
Recall the notion of Pareto efficiency in a related (but not identical) context.

[/ QUOTE ]
Pareto efficiency has nothing to do with the optimality of hedging since the hedging decision involves only one person and Pareto efficiency applies to allocations of resources between multiple agents.

[/ QUOTE ]
I stated explicitly, and you quoted, that it is not an identical situation, so it is pointless for you to say that it is not exactly the same situation. It is obviously related.

When an allocation is not Pareto efficient, the group can do better, since there are changes that make everyone better off. When an individual's risk management choices are inconsistent, e.g., taking on extra risk for less E$, then you can be confident that the individual is not optimizing, even if you don't know whether the inconsistency should be optimally resolved to produce more E$, less risk, or both.

This supports my claim that "it is easy to show that people are acting suboptimally without determining what is optimal," which contradicts what many people have erroneously claimed on this thread. It shows that your statement, "you can't figure out what's optimal for others without considering their attitude towards risk," was irrelevant.

[ QUOTE ]
It is easy to write preferences for which a 100% hedge would maximize utility even if hedging sacrifices a significant fraction of the bet's expected value, despite what you think you've proven.

[/ QUOTE ]
Please do so, then. I'd like to see your attempt. Try to make your preferences plausible descriptions for the advantage gamblers who hedged 100%.

[ QUOTE ]

BTW, pz, do you have medical, house, car or fire insurance?

[/ QUOTE ]
Is this yet another suggestion that I said any form of hedging is wrong? That is ridiculous. I repeatedly said partial hedging is right for many people, in the original post and in just about every post I have made on this thread.

Hedging 100% is wrong for almost all advantage gamblers. Hedging 0%, 20%, or 80% might be right for some. That someone hedged 100% is a clear sign that they made a mistake. If you actually have a backround in economics, you should see that.

[econophile]

you are misapplying your special definition of pareto improvement.

in common use, a pareto improvement is an alternative to the current allocation that makes at least one person better off while making no one worse off.

i think what you are trying to say is that moving from a 100% hedge to a 99% hedge would be analagous to a pareto improvement. this is wrong because to go from 100% hedge to 99% hedge, you must trade off higher variance (a bad) for higher EV (a good). even though you might consider the increase in variance to be neglibly small, it is important to realize it is greater than zero.

if you want to learn about differnt type of preferences than the one's you have in mind, read about loss aversion, reference dependent preferences, and regret theory.

While you may not think these are plausible descriptions of preferences, each of these theories is an active research subject for economists at major univiersities.

[Izverg04]

Here is another crack to explain what OP is saying. Hedging the full amount is equivalent to turning down an offer to make a 2% EV bet for any amount (I believe you can make sports bets with only 2% HA, correct?) This is inconsistent with what advantage gamblers do, so it is wrong to hedge the full amount for all advantage gamblers.

To determine how much NOT to hedge is simple: it is 2% of your Kelly bankroll ("Kelly bankroll" = e.g. bankroll/4 if you are a Kelly/4 bettor). If you find that that amount is greater than $500, then it is wrong to hedge altogether.