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"... only an idiot would make such a gamble with so large a sum. Granted there are a lot of idiots on Wall Street so Don's Wall Street buddies not understanding that they would be risking more money than they would gain on a 50-50 shot isn't that surprising."
I'm wiping the tears from my eyes from laughing so hysterically. The "idiots" you refer to are some of the most famous quants on Wall Street -- the so-called "rocket scientists" who model the most complex derivative products ever created. Every SECOND of their lives, they forget more higher mathematics than you could ever dream of knowing in ten lifetimes.
"In the coin flip with no offer you are risking nothing. But when you turn down a certain offer you risk losing that certain money for the difference between that money and $1M. At offer amounts larger than $500K that is a disadvantage bet. And it gets worse as the amount you would turn down gets larger.
"How is this not the proper way to look at deciding on an offer?
"Those that said more than $500K are bad AP's. Those that said less than $500K are deciding what certain amount is worth having no risk of getting nothing."
I guess there's just no way to explain to you that this has NOTHING to do with what you are bringing up. It has solely to do with the value of money to various individuals. The people to whom I referred above (and many others, who were managing directors -- partners, if you will -- of the firm and who could buy and sell every single member of this forum, cumulatively, dozens of times over) wipe their asses with $100 bills. Their answers reflect their SENTIMENT about the proposition. The great majority of them simply said, "Fuck it; let's flip and rock and roll." I thought we'd have a little more of that here, but such was not the case. Many others, knowing what the e.v. was since the time they were in diapers, which was several years before they graduated from the likes of Harvard, MIT, CalTech, Wharton, and some of the finest institutions of higher learning in the world, thought that maybe they wouldn't flip, but they surely wouldn't take the "pittance" of a couple of hundred thousand as certain compensation. They might shave a couple of hundred thousand from the million, but definitely not HALF of it.
If you can't understand this line of thinking, which has nothing to do with mathematics, then I really can't help you any further, but please stop your condescending tone and your burning desire to explain the math to me by quoting the material in my own book! Do you realize that all the risk of ruin formulas, including all the double barrier, goal, etc., ones that are now so widely used by you and other players come from these Wall Street "idiots"??
PLEASE try to curb your uncontrollable need to respond.
"I would be curious to hear the logic Don's Wall Street buddies used to make what seems like such poor decisions. Who knows maybe I would learn something."
God forbid!
Don
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