Deal or No Deal

TheHammer24 · #1 03-17-2006, 09:13 PM

It's always EV- to take the deal, correct?

Therefore, you would always be wrong to take the deal. And therefore, the correct decision is always to say No Deal.

I am in a huge argument right now. I'd appreciate some back up. [img]/images/graemlins/cool.gif[/img] [img]/images/graemlins/cool.gif[/img]

JackOfSpeed · #2 03-17-2006, 10:00 PM

No, its not, because $200,000 isn't necessarily twice as valuable to you as $100,000.

Luzion · #3 03-17-2006, 10:45 PM

Obviously its always -EV to take the deal. But like JackofSpeed pointed out, you dont just calculate the -EV, otherwise people would never take the deals.

If it was down to $0.01 and $1million, and I was offered $400k then I would easily take the $400k.

I remember there was a specific term for this where you were willing get less profit/reward for a reduction in variance.

TheHammer24 · #4 03-17-2006, 10:59 PM

[ QUOTE ]
Obviously its always -EV to take the deal. But like JackofSpeed pointed out, you dont just calculate the -EV, otherwise people would never take the deals.

If it was down to $0.01 and $1million, and I was offered $400k then I would easily take the $400k.

[/ QUOTE ]

Really? I'd go

Luzion · #5 03-17-2006, 11:14 PM

Well theres your answer then. Its different for different people. The person puts more emphasis on how much they value the money on the line and how it can change their life then pure -EV.

It's like that thing where you ask a poker pro if he would be willing to put his entire bankroll on the line with AA against someson elses hand preflop. Obviously its +EV to go for it, but I recall that many people would not risk everything in that situation.

DuceTrey23 · #6 03-19-2006, 03:02 AM

'Prospect Theory', which deals with human nature and poker mistakes has as one of it's 3 errors as 'loss aversion' where the pain of a loss is about twice as much as the joy of a gain. Good thing to know if you want to make a deal with the chip-leader. Search for Barry Tanenbaum on Card Player's web site. It's an interesting read.

alphatmw · #7 03-19-2006, 03:53 AM

diminishing return on utility.

Go Blue · #8 03-19-2006, 07:14 AM

I've only watched the show a couple of times but each time I saw where it came down to one case left and in both cases the difference in possible amounts was pretty small. In one case there was only $25k and $50k left. The guy was offered I think $38k and turned it down. Another time, from what I remember, the two amounts left were $5 and something really small, like $10. The contestant was offered $3k and turned it down. In the first case, I guess it was alright to turn it down, although probabl stilly stupid IMO. In the second case, you'd really have to be an idiot to turn it down.

I see contestants turn down deals all the time but they're quite stupid...at least from their reasoning. All they ever say is "there's still that $1M out there" and reject. Then, when they open the $1M case it's "well that's ok because there's still the $500k out there" and so on until all the good amounts are gone. F'ing idiots. Just two days ago the contestant was offered about $190k after the first round or two of opening cases and kept rejecting. She wound up with $5k in the end.

ouyangl · #9 03-19-2006, 01:44 PM

I don't really think Expected Value matters in this game. What really matters is how high you can drive up the deal.

Lets say theres 4 cases left:
$5
$1,000
$75,000
$750,000

Offer $225,000.

Thats over the average of the cases, but I'm not going to take the deal because 75% of the time, the offer is gonna spike way up.

IMO, the real key to this game is figuring out how the bank decides the amount of the deal

ThinkQuick · #10 03-19-2006, 05:13 PM

[ QUOTE ]
I don't really think Expected Value matters in this game. What really matters is how high you can drive up the deal.

Lets say theres 4 cases left:
$5
$1,000
$75,000
$750,000

Offer $225,000.

Thats over the average of the cases, but I'm not going to take the deal because 75% of the time, the offer is gonna spike way up.

IMO, the real key to this game is figuring out how the bank decides the amount of the deal

[/ QUOTE ]

I am definitely taking this deal. In fact, something very similar to this happened recently and the woman did not take the deal, and illustrated my point..

Yes, 75% of the time you will drive the deal up to the 250K range, but 25% of the time it drops to the 25K range.
The risk of getting nearly 'nothing' is actually fairly high, and I wouldn't risk it for the extra 25 or 50K, especially because the deal you have described is +EV.

Now, if there was more than one case remaning in the high-zone, then I agree with you, take cases when you have a good chance of driving the offer up; but I wouldn't take a case when it has the option of destroying the game.

In the example I saw, the girl had the one extremely high case removed from play, and then ended up down to $0.01 or $5000. The banker offered her 3800(!) and she still refused the deal. Lucky for her she got the 5000.