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  #91  
Old 09-11-2006, 05:50 PM
grando grando is offline
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Default Re: To hedgers: Adding insult to injury

jesus, this thread is still going?
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  #92  
Old 09-11-2006, 05:51 PM
econophile econophile is offline
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Default Re: To hedgers: Adding insult to injury

jrz1972,

you make many good points.
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  #93  
Old 09-11-2006, 05:53 PM
jrz1972 jrz1972 is offline
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Default Re: To hedgers: Adding insult to injury

[ QUOTE ]
First, reference dependent preferences are a descriptive tool for explaining the actions of apparently irrational agents, not a normative tool for saying how rational advantage gamblers should behave.

[/ QUOTE ]

Yep. You're basically telling people that their utility functions are "wrong." You're advancing a "HEDGERS ARE ALL PU$$IES!!11!" argument and dressing it up in academic-sounding language.
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  #94  
Old 09-11-2006, 07:17 PM
Izverg04 Izverg04 is offline
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Default Re: To hedgers: Adding insult to injury

All advantage gamblers have two things in common: they are money-loving and risk-averse. We are not argue this, right? When such a person is offered to make a 2% +EV or a 5% +EV bet, and choose the stakes, he will find the stakes at which this bet is optimal for him. (Optimal bet will be Kelly bankroll * percent advantage). The answer will never be: "you can take the bet and shove it", unless making the bet is inconvenient in some way.

[ QUOTE ]
Yep. You're basically telling people that their utility functions are "wrong." You're advancing a "HEDGERS ARE ALL PU$$IES!!11!" argument and dressing it up in academic-sounding language.

[/ QUOTE ]

I don't think pzhon called you a pu$$y, more like an irrational [censored].
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  #95  
Old 09-11-2006, 11:49 PM
pzhon pzhon is offline
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Default Re: To hedgers: Adding insult to injury

[ QUOTE ]
[ QUOTE ]

If you believe the situation, then that is either a mistake, or you are not an advantage gambler.

[/ QUOTE ]

It's definitely not a mistake. I just don't like gambling. I like playing poker because it's a fun, challenging game that gives me something to think about. The money is nice, but it's not the main reason why I play.


[/ QUOTE ]
It sounds like you are not an advantage gambler. Don't think this protects you from making mistakes.

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It's great that you're working on an economics degree and everything, but you're overlooking the obvious issue of revealed preferences. People were given the opportunity to partially hedge, and they chose to fully hedge instead.


[/ QUOTE ]
It is very common for people to have an opportunity, and to fail to take advantage of it.

You were given the statement that I already have a degree in economics (and a terminal degree in another field), and you misread it as that I am working on a degree. You were given the repeated statement by me that partial hedging is reasonable, and you misstated it again "You're advancing a 'HEDGERS ARE ALL PU$$IES!!11!' argument" as that I am against all hedging. How are we supposed to believe you behave optimally when you have such difficulty reading?



In this position last night, my opponent played Bar/22(2) 7/1 instead of hitting with Bar/22 Bar/16*, an astounding blunder. This did not reveal a preference for staying stacked up and dumping a checker. He made a mistake. Other plays indicated that although he was trying to win the match, he had a poor understanding of how to get to that situation. As an advantage gambler, it's worth a lot for me to recognize mistakes, to decrease my own, and to find opponents who make many large mistakes.

I believe that many people who hedged 100% did not recognize the option of hedging between 0% and 100%, and that it was a scalable opportunity to bet 10 to win 11.

[ QUOTE ]

That's prima facia evidence that full hedging was EU-maximizing for those people. There is nothing you can do to get around that point.

[/ QUOTE ]
Do you even know what prima facia means? It is a synonym for superficial (at first glance). You are assuming that the people are rational, and that they could not have made a mistake. That assumption is bad, and it is ridiculous to maintain that assumption in a discussion of whether people erred in a particular situation. People make mistakes all of the time, whether you believe it or not, and it is perfectly reasonable to discuss whether people who hedged 100% made a mistake.

Would you also argue that there is no point for a poker player to get a book on poker strategy, because the poker player is already rational and therefore plays poker perfectly?

Hedging 100% (instead of a smaller amount) is a mistake for an advantage gambler. Smart advantage gamblers can recognize this when it is pointed out. You have been given the information. I'm not going to spoonfeed you more.
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  #96  
Old 09-12-2006, 12:26 AM
pzhon pzhon is offline
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Default Re: To hedgers: Adding insult to injury

[ QUOTE ]
i could write other preferences that result in 100% hedges, even ones that are continuously differentiable,


[/ QUOTE ]
Really? I doubt you can come up with anything reasonable, since with a smooth utility function with positive value for money, the derivative of the expected utility of hedging is not 0 at a 100% hedge, and the derivative should be 0 at even a local optimum. Do you think it is a good idea for you to make such statments before actually trying?

Your first attempt was to assume that there is a kink at +$475. Was that reasonable? No. Imagine that just before the Mansion promotion, an interviewer was asking someone about their levels of risk aversion:
<ul type="square">Suppose we give you $n, and then let you bet on a coinflip, risking 10 to win 11. Please state how much would you wager at each level of N.

0: Maybe $5.

10: Still $5.

100: Maybe $10.

1000: I think I'd bet $20.

10000: Gamboool! I'd bet $1000, then.

500: Maybe $15.

475: Not a single penny. The difference between gaining $475 and gaining $474.90 is greater than the difference between gaining $475.11 and gaining $475.

450: Then I'd bet $10.[/list]Is this really supposed to be a plausible pre-Mansion interview of an advantage gambler who hedged 100%? It's absurdly contrived.

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but i fear that they would elicit more long and boring responses from you.


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You are bored when people point out that you are both rude and wrong? Does this mean it happens frequently?

Despite having "econ" in both of your names, you have shown no command of basic economic theory, only irrelevant statements, empty boasts, and condescension. (Meanwhile, I've made a point many people have stated is interesting.) I will ignore you henceforth.
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  #97  
Old 09-12-2006, 12:42 AM
econophile econophile is offline
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Default Re: To hedgers: Adding insult to injury

[ QUOTE ]
[ QUOTE ]
i could write other preferences that result in 100% hedges, even ones that are continuously differentiable,


[/ QUOTE ]
Really? I doubt you can come up with anything reasonable

[/ QUOTE ]

it's quite easy to do with a state dependent utility function. sorry for the technobabble, but for someone with your training in economics, it should be old hat.
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  #98  
Old 09-12-2006, 12:48 AM
econophile econophile is offline
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Default Re: To hedgers: Adding insult to injury

[ QUOTE ]
Your first attempt was to assume that there is a kink at +$475.

[/ QUOTE ]

It's no coincidence that the kink is at $475. The kink is at $475 precisely because that is the risk-free amount that someone can decide to risk part or all of for some higher EV. It makes sense when you are trying to model regret to make the reference point what the person wishes they would have done if things go wrong. For instance, if the steelers lost, some people who didn't hedge might think "if only i had hedge, i would have won $475 instead of nothing."
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  #99  
Old 09-12-2006, 12:49 AM
NSchandler NSchandler is offline
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Default Re: To hedgers: Adding insult to injury

How on Earth can you continue to fight with people about what their own preferences are? I saw you sit there and tell somebody that based on what strategy forums he posts in, you know better than he does what his own preferences are.

Look at this way - suppose somebody came to you and said that he paid off his home mortgage early. You tell that he would have been better off investing the money in the stock market or bond market or wherever because of the tax advantages of mortgage payments, the low interest rates he's paying, etc. If he says "oh I know I could have made more doing something else with the money, I just like to be debt-free," that's all there really is to it. Yes, he could have made more money elsewhere. And he even recognizes this. But he did it anyway. Maybe he just likes the idea of being "debt-free," maybe he likes the idea of having a home that is truly "his," i.e. fully paid off. Whatever, it doesn't matter - it was his preference. You can go on and on about how psychological considerations shouldn't be a part of financial decision making, and so on and so forth, but at the end of the day, that's just your opinion.

In the long run, you'll probably make financial decisions that yield you more money than his would. You might retire with a bigger nest egg even though you didn't save any more than him. But he knew this, it was a cost he was willing to bear for the psychological feeling of being "debt-free." He wasn't wrong, he just had different preferences. Maybe you don't understand them, but it's not wrong.

This is the same thing. You have people telling you "look, I understand what you're saying, but I play poker for fun, I treat poker different from mansion money for whatever reason" ... what else can you say about that? It's just a preference. Maybe it doesn't make sense to you, but it's not wrong. It's just different.

Edited to say: de gustibus non est disputandum
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  #100  
Old 09-12-2006, 05:54 AM
pzhon pzhon is offline
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Default Re: To hedgers: Adding insult to injury

[ QUOTE ]

Yes, he could have made more money elsewhere. And he even recognizes this. But he did it anyway.

[/ QUOTE ]
Ok, he's not an advantage gambler. He likes betting his birthday and following hunches. He hates flipping dimes for $1, but loves flipping quarters for $1. I'm not going to pay attention to any of his gambling advice. But even if he wants to do things his way, he may be better off not being ignorant of the way an advantage gambler should act. That way, he may have some idea of how much he is paying for his eccentricities.

I'm trying to remove some of the ignorance. I pointed out a clear mistake many advantage gamblers made. Smart advantage gamblers should be able to learn from that (thanks for the PMs), even if stubborn fools don't want to admit anything they do might be wrong, and trolls want to pretend that I must be arguing against all hedging when I repeatedly say from the original post onward that hedging 80% might be right, but hedging 100% was almost certainly wrong.

Once again, you don't have to know what someone's preferences are to see that they are making a mistake. The easiest explanation for advantage gamblers skipping a small bet of 10 to win 11 was not that they had ridiculously contrived preferences, but that they overlooked the opportunity, and how it compares with other gambles they routinely accept as advantage gamblers.
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