I just think it’s foolhardy to bet at all. There’s not enough information to make an informed decision, and even if you think you’ll have better average odds by betting on the underdogs, this is a very rare event so you don’t have the time to make it back up in averages.
I think this is a fundamentally different way of thinking that we have. The way to win at betting is to have a better distribution than the other guy. You don’t need to have high confidence about any particular outcome, you just need to recognize when the distribution of odds differ from the true odds. Strong favorites in a low information environment indicate a chance to make good money. Sure, any given low information environment, like a papal conclave, may occur infrequently, and you could lose money on any one event, as is the nature of betting, but if you can recognize when the market is likely to be wrong you can extract money from it. Really, that is the only way to extract money from it.
Let’s assume there are 10 candidates with a 1% chance to win each, and 9 candidates with a 10% chance to win each, as given by betting odds. Let’s also assume the odds are off by 2x for those bottom 10 candidates, and 1.1% point for the top 9.
The smart move is to bet on the bottom 10 candidates because your expected return is much higher than expected.
However, you still have an 80% chance of failure. That’s fine if you have enough instances to bet on, but you have maybe two or three in a lifetime. That’s not a high likelihood of winning long term, not to mention that most of your bets will fail even if you win once.
But that’s me thinking from an investing perspective since I’m not a gambler.
I just think it’s foolhardy to bet at all. There’s not enough information to make an informed decision, and even if you think you’ll have better average odds by betting on the underdogs, this is a very rare event so you don’t have the time to make it back up in averages.
I think this is a fundamentally different way of thinking that we have. The way to win at betting is to have a better distribution than the other guy. You don’t need to have high confidence about any particular outcome, you just need to recognize when the distribution of odds differ from the true odds. Strong favorites in a low information environment indicate a chance to make good money. Sure, any given low information environment, like a papal conclave, may occur infrequently, and you could lose money on any one event, as is the nature of betting, but if you can recognize when the market is likely to be wrong you can extract money from it. Really, that is the only way to extract money from it.
Yeah, here’s how I think about it.
Let’s assume there are 10 candidates with a 1% chance to win each, and 9 candidates with a 10% chance to win each, as given by betting odds. Let’s also assume the odds are off by 2x for those bottom 10 candidates, and 1.1% point for the top 9.
The smart move is to bet on the bottom 10 candidates because your expected return is much higher than expected.
However, you still have an 80% chance of failure. That’s fine if you have enough instances to bet on, but you have maybe two or three in a lifetime. That’s not a high likelihood of winning long term, not to mention that most of your bets will fail even if you win once.
But that’s me thinking from an investing perspective since I’m not a gambler.
deleted by creator