Games and gambling
I spent a while studying betting on the horses and dogs to see if there was a formula for making a profit. You could, but only if you limit the bets to about ten races a year when the odds are in your favour - small fields, no jumps, non-handicap, top racecourses and good ground. What I found was that the pundits and the punters were good at selecting the winners. As so many bets were placed on the horses that were most likely to win the odds the bookmakers gave is always too low.
I want to talk about overround as I spent a lot of time on it and it feels a shame not to write something on the subject. It makes the difference between making a profit – which very few do, making a small loss – a fee for the entertainment and losing all your money very quickly. Bookmakers have an overround, casinos a rake and lotteries take a massive slab for worthy causes. If we bet on heads or tails, we could be given 2 for each win but lose 1 if the coin doesn’t land in our favour. You could bet on both heads and tails and come out losing nothing, winning nothing. Equally you could place proportional seized bets on all the horses in the race and lose a percentage, the overround. If the overround is zero over time no one wins, no one loses. Were the bookmaker to give 1.95 they make a small profit. Few make enough at that rate to pay the bills. Instead they pay 1.8, 1.7 or even just 1.6. The speed at which you the person placing the bets lose your money is dramatically increased.
The more runners in a race the easier it is to hide the size of the overround. The lower the prestigiousness of the race course the more low-income hapless people you have placing tiddly bets hence the overround needs to be high to make it worthwhile. A handicap race is designed to even out the field, not at all good for a professional punter. Jumping over hedges is exciting but your horse will pull up or chuck the rider off too often. All in all, the market for making money is limited. The same can be said for stock markets. You need to be picky to reduce the losses.
People claim to have systems. It is always hocus pocus and nonsense to draw you in. The classic system; keep raising your bet each time you lose to cover the last string of losses suffered. This works if you have billions in the bank and the bookmaker will accept the huge bets. Believe me you can get long losing runs, 50 in a row. That is the thing with randomness, it can produce long strings of the same number or long strings without a number.
What do we have for those that want a dream, a wish to escape the drudgery and are far too lazy to build it? We have the lottery. We insist on giving it a shot, even though we know that in any given week we can be a hundred times more likely to perish than win. Saying ‘you have to be in it to win it’ gets more to play and ramps up the top prize.
People see money and cards and assume that it is all gambling. How wrong they are. Luck will be intertwined but over the long course of play those with the most skill and patience lose the least. A whimsical few actually make from it, enough to service a good lifestyle. They are few and far between though. People exaggerate their wins and don’t mention the accumulative losses.
The fruit machine effect is a huge trap. You keep feeding it as you believe it will soon pay out. The more you have put in the closer you think you are to getting a jackpot. In reality, every coin you put in costs you a certain amount, typically about 20% depending on how shrewd the machine owner is. These machines work in the same way as you might wait and wait for a bus, wishing more and more that you had walked away, clenching on to the hope one will turn up. The more time invested the more you wait. Eventually you have to give up if none shows. The only real lesson is to avoid getting caught up in these situations whenever possible.
There is a game that you can be asked to play where you are given the choice of sharing or trying to have it all. The prize pot can be split 50/50 or one person can take it all. If both people elect to ‘steal’ then neither gets anything. You can run various models with the game played out over and over. The co-operation strategy is the most fruitful in the long run. It requires you to forget about the times that you were suckered and ignore the temptation to make any reprisals. People however do not operate by logic, they use emotional attachments and read body language. They will share in some circumstances and not others. The idea of such games for study is fundamentally flawed by the complexities of human nature. If you only get the chance to play this game once in your lifetime, you may act differently to when you get to play once a week.
Trying to put numbers to situations and running models is erroneous. The mathematics might look clever but there are always dreadful assumptions in the way you convert the idea to a number. Five people are not five people, one is obese, one is blue eyed, one has an arm amputated, one is pregnant the other is normal like me. If you see the sign that says max 6 persons and the lift has five massive people in it, are you tempted to take the stairs this once?
People enjoy sharing, they enjoy doing one another favours because they like to. Not because they want something in return and not because of any subconscious duty. People do not always consider that being a ‘sucker’ is detrimental. Many animals including humans find that helping one another is rewarding, sometimes more so than helping yourself. People will say; “I got more enjoyment giving it away than I ever would spending it on myself.” Selfishness is a double-edged sword with the greater true gain made in the giving in so many cases. Sometimes you can help others and you feel as though they really appreciate what you have done. In other cases, helping out lands you in trouble and is a bit off putting, but overall, we tend to keep on doing it. We do not co-operate to help us survive we co-operate as it is joyous. You can’t place a number on that.
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