.jpg)
There has been a very interesting discussion on twitter, relating to some stuff said by Sam Bankman-Fried (SBF), who at the time of writing ...
Kelly criterion
In probability theory, the Kelly criterion is a formula for risk allocation with the sizing a sequence of bets by maximizing the long-term expected value of the logarithm of wealth, which is equivalent to maximizing the long-term expected geometric growth rate. John Larry Kelly Jr., a researcher at Bell Labs, described the criterion in 1956.
Been sleeping on this thought. I’m surprised by how much people are willing to indulge SBF’s weird EA ideology/funky math ideas as some sort of meaningful mitigating factor that moves him from scammer bucket to good/well-intentioned. To me it puts him into the terrorist buck
Been sleeping on this thought. I’m surprised by how much people are willing to indulge SBF’s weird EA ideology/funky math ideas as some sort of meaningful mitigating factor that moves him from scammer bucket to good/well-intentioned. To me it puts him into the terrorist bucket.— Venkatesh Rao ☀️ (@vgr) November 15, 2022
The all in bet maximizes the arithmetic growth rate, but it certainly doesn’t maximize the geometric growth rate. A Kelly bet does. So which growth rate is “long term”. From a single players perspective, it's clearly the geometric return. https://t.co/X4jmbHBzXg
The all in bet maximizes the arithmetic growth rate, but it certainly doesn’t maximize the geometric growth rate. A Kelly bet does. So which growth rate is “long term”.From a single players perspective, it's clearly the geometric return.https://t.co/X4jmbHBzXg— Matt Hollerbach (@breakingthemark) November 11, 2022
How Not to Play the Game
Magic beans, Bahamian penthouses, old-fashioned fraud and other important SBF-inspired insights. A postscript to Bloomberg Businessweek’s The Crypto Story.
Harry Browne’s 17 Golden Rules of Financial Safety
When you read in the news that a person whom you know as rich and wealthy is in financial trouble or has declared bankruptcy, it is easy to feel a sense of futility about managing your own money. Y…
Prospect Theory, Mental Accounting, and Differences in Aggregated and Segregated Evaluation of Lottery Portfolios
If individuals have to evaluate a sequence of lotteries, their judgment is influenced by the presentation mode. Experimental studies have found significantly higher acceptance rates for a sequence of lotteries if the overall distribution was displayed instead of the set of lotteries itself. Mental accounting and loss aversion provide an easy and intuitive explanation for this phenomenon. In this paper we offer an explanation that incorporates further evaluation concepts of Prospect Theory. Our formal analysis of the difference in aggregated and segregated portfolio evaluation demonstrates that the higher attractiveness of the aggregated presentation mode is not a general phenomenon (as suggested in the literature) but depends on specific parameters of the lotteries. The theoretical findings are supported by an experimental study. In contrast to the existing evidence and in line with our theoretical results, we find for specific types of lotteries an even lower acceptance rate if the overall distribution is displayed.
Small Bets — Expert-Led Classes for Entrepreneurs
Get lifetime access to 53 expert-led classes. One payment, yours forever.
The Algebra of Wealth: A Simple Formula for Financial Security by Scott Galloway
A must-have guide to optimizing your life for wealth and success, from bestselling author, NYU p...
Behavioral Impediments to Valuing Annuities: Complexity and Choice Bracketing
Abstract This paper examines two behavioral factors that diminish people's ability to value a lifetime income stream or annuity, drawing on a randomized experiment with about 4,000 adults in a U.S. nationally representative sample. We find that increasing the complexity of the annuity choice reduces respondents' ability to value the annuity, measured by the difference between the sell and buy values they assign to the annuity. When we limit narrow choice bracketing by inducing people to think first about how quickly or slowly to spend down assets in retirement, their ability to value an annuity increases.
Make ‘em dumb, sell ‘em smarts
Sam Altman wants intelligence to be a utility that you pay him for
Axios Pro Rata: SBF Trick-or-Treat
Dan Primack’s briefing on VC, PE & M&A for dealmakers.
A Behavioral Model of Rational Choice
Abstract. Introduction, 99. — I. Some general features of rational choice, 100.— II. The essential simplifications, 103. — III. Existence and uniqueness of
Essential Randomness — Ms Boba's Emporium of Weirdness
Ms Boba's experimental website. Open for business while construction is ongoing.
Essential Randomness — Ms Boba's Emporium of Weirdness
Ms Boba's experimental website. Open for business while construction is ongoing.
Mark Zuckerberg Sure Sounds Eager to Get Young People Hooked on Online Gambling
The Meta CEO is developing a social network betting market app—and wants help from Polymarket and Kalshi.
interfluidity » Why is finance so complex?
Lisa Pollack at FT Alphaville mulls a question: “Why are we so good at creating complexity in finance?” The answer she comes up with is the “Flynn Effect“, basically the idea that there is an uptrend in human intelligence. Finance, in this view, gets more complex over time because financiers get smart enough to make it so.