Originally Posted by Alan Mendelson View Post
Frank thank you for this post. Very interesting and informative. You present a lot of information as well as an interesting way to examine things when it comes to betting.

One question, and it comes from your opening:

"If I offered you 98 cents in exchange for a dollar you would likely refuse the wager, yet this is exactly the type of exchange that most casino patrons accept every day. There is no functional difference between handing the casino a dollar and getting back 95 cents and a dollar wager made on roulette, yet one is accepted and the other is rejected. Why is this?"

I think most gamblers are willing to accept the casino edge on each bet for the opportunity to win more than they bet. For example, you bet $5 on a video poker game with a 2% edge for the casino for the chance of doubling your bet money, or tripling it or hitting a royal flush for oodles of money.

How does this desire to win more than the initial bet figure into your thesis?

Thanks.
It is the thesis. When you add a random element to a negative exchange the human mind loses the ability to accurately judge the deficit, and will accept the bum deal.

As Rob or Arci will be only to happy to tell you, over time and with enough trials the net result ends up being the same, with or without the random element. If you're playing roulette, you are going to end up down about 5 cents for every dollar you bet...the short-term fluctuations are just window dressing on a rotten dilapidated shed.