Variability question

[naturalbeing]

So, the question is;

You have a $1000 bankroll. You have a 1% chance to make this bankroll into $100,000. Do you stick with the $1000 or take the chance?

 

[naturalbeing]

I suppose a responsible person would say that you cannot take the chance. It would bust your bankroll and ultimately there is no value to be gained from it. I just think it is an interesting question from the standpoint of assessing variability in general especially in tournaments when it can crush your stack. It seems to me that it is particularly intelligent to give up some value favor of stability rather than trying to suck everything dry. I'm just wondering where and how we legitimately draw these lines between risk and reward.

 

[vitalicharniak]

If you take the risk, then only 1% -10% otherwise 99% of the chances of flying into the pipe

 

[terryk]

I`d rather put in on red or black,,,it`s a 50/50 shot u get to $2000(then do it again)

 

[Nodus Jazz]

I`d rather put in on red or black,,,it`s a 50/50 shot u get to $2000(then do it again)

Problem is however that black/red have less than 50% chance, remember 0 is separate (green). So you're like 49% percent I think, which over the long run gives an edge to the house.

 

[naturalbeing]

I know the question is a sort of simple question, but like I said it seems a bit stupid to try to chase value when that value has a large downside. Sure a play might have a positive expected value and in the long run it'll will turn a profit, but in the short run it might knock you right out of the tournament. Really gets complicated trying to mitigate risk while not giving away money.

 

[terryk]

Problem is however that black/red have less than 50% chance, remember 0 is separate (green). So you're like 49% percent I think, which over the long run gives an edge to the house.

thx for clarifying

 

[XXPXXP]

So, the question is;

You have a $1000 bankroll. You have a 1% chance to make this bankroll into $100,000. Do you stick with the $1000 or take the chance?

99% lost 1000
1% win 100K

so EV is 1000-990= +10

you want to invest this situation? no worth. the return of investment is 1%

if I remember correct, put this into your CD or saving account, GTD 1.2% annual interest rate, so put 1K into CD or saving account, in the year end, GTD 12 with 100% secure of your 1K .... beat this.

not to say, wells fargo, chase or citi sometimes put a promotion to ask you open a checking account and hold 300USD into that account for 6 months, after that they give u 300 USD ...humm beat this as well.

 

[naturalbeing]

99% lost 1000
1% win 100K

so EV is 1000-990= +10

you want to invest this situation? no worth. the return of investment is 1%

if I remember correct, put this into your CD or saving account, GTD 1.2% annual interest rate, so put 1K into CD or saving account, in the year end, GTD 12 with 100% secure of your 1K .... beat this.

not to say, wells fargo, chase or citi sometimes put a promotion to ask you open a checking account and hold 300USD into that account for 6 months, after th
at they give u 300 USD ...humm beat this as well.

The point really isn't to explore the dynamics of value, but how variability and taking long shots in poker can be detrimental to tournament games and bankrolls. For example, it may be reasonable to wager your bankroll on a +ev wager but if it is a longshot the cost of losing that wager is high. In a tournament, which is my main interest, there are certain situations that are similar. Technically, you can end up in +EV spots, but they aren't worth taking since the variability is high. Why should I risk busting out of a tournament completely? Now the truth is that these busts will average out across tournaments, but what I do instead is decrease my win rate in order to increase my stability by passing up risky value. Basically I am sort of trying to get a better understanding of how I should play so that I can find a happy medium between variability and value.

 

[feecg]

Getting 100k in a 1% 1k shot is break even. But in fact you could win that shot in some tried if there were more chances to do it (which is not the case proposed).