Even When You Need to Win, Most Will Eliminate
If you haven't Previously, https://papers.ssrn.com/sol3/papers....act_id=2856963.
Below is the Abstract
What would you do if you're encouraged to play a sport in which you were given $25 and permitted to place bets for 30 minutes on a coin that you were advised was biased to come up heads 60% of this time? This is exactly what we did, gathering 61 quantitatively women and trained men to play with this game. The results, in summary, were the majority of these 61 gamers didn#8217;t place their bets demoning a panoply of behaviorial and cognitive biases. About 30% of the subjects really went bankrupt, losing their25 bet. We discuss optimal egies, evaluation of the opportunity to play the sport and its similarities to investing in the stock market. The impliion of the study is that people will need to become trained and edued in how to process decision. If these quantitatively trained gamers, playing with the easiest game we could think of involving uncertainty and favourable chances, didn#8217;t perform well, what hope is there for the rest of us when it comes to enjoying with the biggest and most crucial game of all investing our savings?
The daring announcement says it all really.
In the this study, you have $25 to perform an a bonded advantage of 10% if you simply bet heads. With the timeframe, about 300 bets could be made by one. If you just bet on heads each time, it would be almost impossible, if not impossible to reach the maximum of $250.00.
Each and every individual KNEW this going in, they were informed, no matter what, betting heads gives you a 10% edge. If you were able to find/create this scenario on the market, that is THE holy grail...
A brief summary of the outcomes:
These results are amazing!Originally Posted by ;
1. Nearly 1/3 of those players went bust with a edge. Imagine whether casinos had edge that is 10%. These people had almost a 10x higher edge than a casino, and almost 1/3 withdrew their money and dropped...
2. Only 18 of 61 people attained the maximum of $250.00. Basically everyone should have attained the maximum if they just followed the system.
3. And, this is the most fascinating, almost 2/3 of those players really bet on tails at times during the experiment... Almost 66% of those people took stakes they KNEW had a 10% edge against them.
This only shows, even if you're able to win and have the system to triumph, most people will still lose. Most people drop with a guaranteed 10% edge... You can bet your ass most will lose with a smaller edge that is dynamic as the market changes.
Why? People don't do what they are supposed to, even if they are aware of what they are doing will not do the job, or is wrong.
Even when given a sacred grail, 1/3 of those people will drop, and only 1/5 will find the maximum payout. Even if you mathematically shouldn't lose (possess the holy grail), a majority of people will still lose... Along with this, 1/3 of most people will make bets that don't have any positive expected values, even if they know this to be true.