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Thread: It occurs to me that ...

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    1 out of 1 members found this post helpful. Did you find this post helpful? Yes | No

    It occurs to me that ...


    ... a huge handicap to becoming an advantage Blackjack Player is the
    emotional attachment to money that newbies so often bring to the table.

    This is so very much like the emotional attachment that they may have to an
    (abusive/neglectful) (partner/spouse)
    ~ just like the BJ game that is their mistress.



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    True dat, yo. Brotha Flash preachin the truth!

    But for real that's one of the things I love most about AP. It teaches you money is just money. It's a unit, a tool, something to be calculated but that you don't have to worry about every single dollar (in regards to variance and getting unlucky/etc). You need to be able to take the swings, and in order to do that, you need to not sweat the bad luck and losses. Freedom from moneys hold on most of us is something I really love that I got from AP'ing.

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    As well as helping researchers understand how much a bet is worth in purely mathematical terms, wagers have also revealed how we value decisions in real life. During the eighteenth century, Daniel Bernoulli wondered why people would often prefer
    low-risk bets to ones that were, in theory, more profitable. If expected profit was not driving their financial choices, what was?


    Bernoulli solved the wager problem by thinking in terms of “expected utility” rather than expected payoff. He suggested that the same amount of money is worth more—or less—depending on how much a person already has. For example, a single coin is more valuable to a poor person than it is to a rich one. As fellow researcher Gabriel Cramer said, “The mathematicians estimate money in proportion to itsquantity, and men of good sense in proportion to the usage that they may make of it.”


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    The economists "utility function" explains several things, e.g.
    how a lottery ticket can be a good purchase for a poor person.
    or why only a fool would risk his entire bankroll simply because
    he "has the best of it." If my bankroll is $10,000 and someone
    offers to have ME flip MY coin (and call it) placing $10,500 to my
    $10,000 in escrow, I instantly refuse because the LOSS of 10 K
    has a devastating effect, while winning 10.5 K has a salutary, (but
    not life-altering), effect.

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    Economics teaches us that value is subjective and that utility is ordinal (ranking). We cannot say 'how much' a man values something, only that he values X > Y and that action demonstrates preference.

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    Quote Originally Posted by moses View Post
    "Since when is emotional attachment to money a bad thing."
    Not exactly a recent notion. Since the Dawn of Recorded History.

    "The Love of Money is the Root of all Evil."

    Does that sound at all familiar to you ?

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    Quote Originally Posted by ZenMaster_Flash View Post
    Not exactly a recent notion. Since the Dawn of Recorded History.

    "The Love of Money is the Root of all Evil."

    Does that sound at all familiar to you ?
    yes my mother used to say that to us.
    another thinker is this,
    In this world there is good and evil,no in-between

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    This reminds me of prospect theory:

    Option A: You have an 80% chance of winning $4,000, but a 20% chance you win nothing.


    Option B: You have a 100% chance of winning $3,000.


    Which would you choose and why?


    Option A: You have an 80% chance of losing $4,000, but a 20% chance that you lose nothing.


    Option B: You lose $3,000 for sure.

    The answer is "A" in the first set and "B" in the second set. Most people reverse them though, especially choosing "A" in the second set.

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    Quote Originally Posted by marriedputter View Post
    This reminds me of prospect theory:

    Option A: You have an 80% chance of winning $4,000, but a 20% chance you win nothing.


    Option B: You have a 100% chance of winning $3,000.


    Which would you choose and why?


    Option A: You have an 80% chance of losing $4,000, but a 20% chance that you lose nothing.


    Option B: You lose $3,000 for sure.

    The answer is "A" in the first set and "B" in the second set. Most people reverse them though, especially choosing "A" in the second set.
    With multiple kicks at the cat, and with more and more kicks at the cat, your correct answers are proper. However, with only 1 kick at the cat, what would the risk averse person do?

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    Quote Originally Posted by shorty 2 View Post

    In this world there is good and evil,no in-between
    Hardly ---

    Nearly everything resides between those extreme polar opposites.



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    Quote Originally Posted by moses View Post
    I'm thinking Freighter would go find some more pu**y?
    It would need to be conscentual - purposeful spelling error

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    That may depend on (her) gross tonnage.

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    Quote Originally Posted by Freightman View Post
    With multiple kicks at the cat, and with more and more kicks at the cat, your correct answers are proper. However, with only 1 kick at the cat, what would the risk averse person do?
    I suppose I should have given the background of this experiment.

    In March, 1979, two Israeli psychologists published an article that rocked the field of economics. Previously, economists assumed that humans were, for the most part, rational beings who weighed value and probability to maximize their "utility." The two psychologists suggested that this was not just overly simplistic, but was simply wrong. Humans were not always rational. In fact, they were predictably irrational. Instead of deliberating within the laws of logic, people consistently use mental shortcuts, or "heuristics," which lead to systematic biases in how we make decisions under uncertainty.

    In their famous paper, these two psychologists, Daniel Kahneman and Amos Tversky, proposed an alternative framework to model human decision-making, which they called "prospect theory." They focused on choices involving uncertainty, some between two possible financial gains, and others between two possible losses. As they wrote, for example, consider which of the following, A or B, would you prefer? Option A involves an 80% chance you win $4,000, but a 20% chance you win nothing. Option B guarantees you win $3,000 for sure.


    If you're like the majority of participants in their study, you chose B. When it comes to gaining stuff, you prefer certainty over risk-taking, even if the expected value (e.g., value times probability) of the gamble is slightly higher. Now, consider you were at risk to lose money. Which of the following options, C or D, would you prefer? Option C involves an 80% chance you lose $4,000, but a 20% chance you lose nothing. Option D guarantees you will lose $3,000 for sure.

    Although the amount of the losses and gains are the same, like the majority of people, you likely now chose C. Contrary to classical economic theory, our preferences aren't always so consistent: when it comes to losing we prefer risk-taking, but when it comes to winning we prefer certainty.

    The original paper has since been cited almost 9,000 times, and Kahenman later won the nobel prize in 2002 for bridging the gap between economics and psychology (Tversky had died of cancer before the award was officially anounced). It also helped spur a tsunami of research, as psychologists and economists worked to elucidate the many other biases in everyday decision making. Today, almost 200 cognitive biases, fallacies, heuristics, effects, and illusions have been elucidated, comprising a whole new sub-field of psychology (which economists call "behavioral economics").

    Still, many interesting questions remain in the field. For instance, between the negativity bias, optimism bias, overconfidence, and underconfidence, we tend to have a somewhat distorted view of ourselves. Whereas these biases at times can be useful, recentresearch shows that accurate self-knowledge is important for the quality of relationships. In what other situations is accurate self-perception important? And how can we improve accuracy when we want it?


    In addition, although the hot hand fallacy has been studied extensively in sports (i.e., basketball players, for the most part, don't actually get "hot," we just mistakenly see patterns in randomness, particularly when it comes to streaks), few researchers have looked at how a sense of hot or cold hand, or momentum bias, may transfer across different activities or domains. In particular, after a streak of good or bad random events, to what extent do we develop an illusion of self-efficacy or a more generalized hot or cold hand beyond the change in our emotions? And what is stronger, the hot hand or the cold hand fallacy?

    I originally read about this question in a paper that was talking about how people approach the stock market, which I am heavily involved in. So this is definitely not a one-time choice, but rather a recurring decision to be made in a constantly moving market. The lesson, in a nutshell, is that you are to "let your winners run" and "stop your losses short." It is meant to change one's investment philosophy which is so often wrong. Most people, as ZMF stated, attach emotion to their investing decisions. The emotion at hand is usually fear. They buy after the stock is already overpriced because they "fear" that they are going to miss out and they get in too late. When the stock inevitably drops, through fear again, they do not want to accept that they are going to lose so they continue to hold onto the stock. They will often however finally proceed to sell at the worst possible time. So "buy low and sell high" becomes "buy high and sell low," which is obviously the opposite of what one should do.
    It would be an understatement to say that blackjack is a volatile undertaking. It takes so much trust and self-control. While the stock market is volatile at times, it is more "passive" from most people's point of view. They just "buy it and forget it." With blackjack, it is "active." An AP may have to helplessly watch as their bankroll diminishes week after week in a sudden turn of variance. Self-control is paramount in this situation. They must stick to the plan.
    This is why one of my favorite investing weapons is the Married Put (hence my username). I like knowing that my potential gain is infinite while my potential loss is limited. After all, the only thing that I can 100% control in the stock market is how much I can potentially lose. I therefore like choosing investing instruments that give me this option.
    I know that you are a smart guy Freightman, so all of this is probably pretty obvious to you. Hopefully my comments will help other readers out there as well though, lurkers included.
    To answer your question though, I think it all comes down to preference. If it were a one-time choice, I would still go for the $4,000 win and the $3,000 loss, but that is just me. I like those odds. It would satisfy the part of me that wants to "gamble" while still giving me justification for my choice by knowing that I am still making the correct mathematical decision. However, would I still make the same decision if I added one, two, or more zeros to those numbers? Hmmm.....THAT question is even more fun!
    Last edited by marriedputter; 05-06-2016 at 01:22 PM. Reason: Misspelled Freightman's name. Not nice.

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