A method for fair bargaining over odds in 2 player bets! 2020-01-11T01:18:23.185Z

Comment by Agrippa Kellum (asktree) on A method for fair bargaining over odds in 2 player bets! · 2020-01-16T18:32:53.639Z · LW · GW

Good point.

Comment by Agrippa Kellum (asktree) on A method for fair bargaining over odds in 2 player bets! · 2020-01-16T18:31:37.970Z · LW · GW

By $2 bet at 66% odds, I mean that the Yes position costs $2*66% and the No position costs $2*34%.

You're right that "max wager" is meant to be maximum loss. I think you're picking up on the fact that I made a mistake in calculating loss for each player. I was calculating the potential loss for "$2 bet at 66%" as 2 dollars for both players, but that's obviously wrong, and no reason afaik that the players should have the same maximum loss. Thanks for the observation.

I don't understand your observation about the incentive to overstate.

Let's say A gives event E 60% odds and B gives E 90% odds. For a bet at even odds:

EV_A(YES) = .4 * -.5 + .6 * .5 = .1

EV_A(NO) = .6 * -.5 + .4 * .5 = -.1

From A's perspective the no position on the 50/50 bet (or any bet where the no position costs more than 40 cents on the dollar) is negative EV. So if A submitted 0% odds, they'd be forcing themselves to take a lot of negative EV bets.

Comment by Agrippa Kellum (asktree) on A method for fair bargaining over odds in 2 player bets! · 2020-01-12T17:28:29.013Z · LW · GW

I like your summary of the method. Good point as well. Perhaps you would want a norm that players don't discuss their maximum bets before entering them.

I'm not familiar with the Kelly Criterion so I'll check that out.