Code I wrote for this video: https://github.com/manforowicz/Manim-Videos/blob/main/kelly_criterion.pyGreat ergodicity economics blog post by Jason Collins: h...
And 80% gain gives you 1.8x. A 50% gain gives you 0.5x. When combining them, you multiply them, giving you 0.9x, which is a 10% loss with each set of 2 flips.
Try it yourself: $100 x 1.8 = $180. $180 x 0.5 = $90. So you start with $100 and end with $90.
What is wrong with it? That’s exactly what he shows in the video. When betting it all, equal wins and losses is a net loss. The point is betting some fraction such that the gains overtake the losses
The guy in the video did his math wrong.
And 80% gain gives you 1.8x. A 50% gain gives you 0.5x. When combining them, you multiply them, giving you 0.9x, which is a 10% loss with each set of 2 flips.
Try it yourself: $100 x 1.8 = $180. $180 x 0.5 = $90. So you start with $100 and end with $90.
What the fuck? 50% gain gives you 1.5x not 0.5x For 50% decrease, you multiply by 0.5
Whoops, typo.
What is wrong with it? That’s exactly what he shows in the video. When betting it all, equal wins and losses is a net loss. The point is betting some fraction such that the gains overtake the losses