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SpoR   United States. May 01 2015 10:51. Posts 1254

Look at all these nit ass donkeys

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ZERG! 

brambolius   Netherlands. May 01 2015 12:02. Posts 1708

Jezus christ...

Heat......EXTEND 

MadeInPolanD   Poland. May 01 2015 12:28. Posts 1383

Oh c'mon, many people don't know where Germany is and you want them to know how valuable is winning 12$ vs losing 10$ on a coin toss? That's like quantum physics to them.

Also i gotta add: if the 20 dollar bill is red, it's common sense not to want it - it's a fake.


On a serious note: just cause there is a camera, doesn't mean that people think he's legit and it's not some sort of a con. ( at least at first, and they are not gonna say that bluntly, so they say: "i don't know, i just feel like that" etc. )

Make it rain$$$Last edit: 01/05/2015 12:39

Mariuslol   Norway. May 01 2015 12:39. Posts 4742

It's much more than what you guys might think it is, it's not only the risk reward, there are a lot of other factors coming into play as well.

I can elaborate a little further for anyone interested, but I might not explain it all that well.

Our brain has a lot of habits, defaults that aren't always good for us, like "safety" measures, I think the right term for it is fallacies, but I'm not 100% sure if that's what it's called. Some of the major ones that come into play in this scenario;

Like status quo fallacy, we always prefer, and like "the status quo" over alternatives which outcome we're not entirely certain of. It can be something as silly as, a friend comes over, gives everyone a different chocolate bar, and then 5 min later, says they can switch bars with each other. People are pretty inclined to keep the one they got, and put much higher value on it, since "it's theirs".

Same when it comes to selling things with affectionate value, or even small stuff like. You're pretty comfortable, get invitation to come do something that might not be up your alley, more inclined to maintain status quo (and stay at home).

Also our brain in general don't understand or work well with numbers, unless we've learned the concepts. We only think we understand numbers, statistics well, but we don't, we think we do because our brain's pattern recognition, is maybe the strongest attribute (or one of the), it has.

Ahh, I know there's a few more factor coming into play, but as I started writing I forgot lol, there's a few more than comes into play, but I can't remember lol, sorry.

 Last edit: 01/05/2015 12:41

Mariuslol   Norway. May 01 2015 12:55. Posts 4742

Oh, this isn't "facts" just my own thoughts. I think when people say something out loud, even though the scenario changes a little, people more inclined to stick with what they just said, because they said it. Kinda like when you see people come into arguments, even when proven wrong, people stick to their guns!

Also some might think there's some "trick to it"!


Another thing that i think might come into play, like, when we're talking to new people, strangers, this guy even has a camera filming, we're not thinking that well. Brain mostly using default operating system, which is intuition. And then people don't really think about the spots given, more just going with "what feels" right.

I should really unpause, and see what happens, im just 1min 30 sec in lol


Mariuslol   Norway. May 01 2015 12:58. Posts 4742

Ohh, and another thing that popped into mind (still have it paused lol, im cooking).

I don't remember exactly, but saw a graph ones of the emotional distress when something "bad" happens compared to something good, and I think it's over twice as "negative" when bad stuff happens, than positive. Like, if ur playing sc2, and ur winning 55%, still feels like we're doing quite shit. Even though we're doing better than average. So to "feel great" we'd have to be winning like 67% of the time or so, to feel pretty good or neutral about it.


tomson    Poland. May 01 2015 13:14. Posts 1982

Cool, read a chapter about this in 'Thinking Fast, Thinking Slow' by Daniel Kahnenman just yesterday.

Research shows people the threshold point where people take the bet is somewhere between 1.5x and 2.5x the amount they risk.

It might not seem logical, but from a evolutionary standpoint it makes sense - risk averse individuals were more likely to survive.

Peace of mind cant be bought. 

Nazgul    Netherlands. May 01 2015 13:19. Posts 7080

It's interesting because every person here would accept the bet based on our experience and general understanding of value. However the emotion that is explained as the reason for why these people decline is something that I think every/most poker players share, which is that losses are experienced stronger than winnings. When winning in poker I saw it as standard and it didn't make me feel particularly positive/different. Losing however definitely was associated with negative emotion. Of course this is associated also with the fact that our expected value of playing is positive to begin with. Additionally I imagine they just edited out the people who just said yes to $12 vs $10.

You almost twin-caracked his AK - JonnyCosmo 

RaiNKhAN    United States. May 01 2015 14:02. Posts 4080

^ I think they just prob assume ppl who are offering +EV coin flips are just like ppl who rig those 3-card monty games and they expect to lose.

The biggest Rockets, Sixers, and Grizzlies fan you will ever meet! 

Trav94   Canada. May 01 2015 14:16. Posts 1785


  On May 01 2015 13:02 RaiNKhAN wrote:
^ I think they just prob assume ppl who are offering +EV coin flips are just like ppl who rig those 3-card monty games and they expect to lose.



They could always just ask to look at the flipping coin/ask to flip it themselves?


MadeInPolanD   Poland. May 01 2015 14:26. Posts 1383

just like people look at those 3 cards :D

Make it rain$$$ 

tomson    Poland. May 01 2015 15:43. Posts 1982


  For those who are wondering, I convinced my interviewees that the bet was not a scam: they could inspect the coin, flip it themselves, use their own coin etc. I explained that the experiment was intended to explore their approach to risk. It was fear of losing $10, not distrust, that led them to decline the bet.

Peace of mind cant be bought. 

LemOn[5thF]   Czech Republic. May 01 2015 17:44. Posts 15163

couple concepts from behavioral psychology at work here:
1) endowment effect.
"I don't want to risk to lose MY $10" - like that chick said.
2) Prospect Theory



From the POV of standard economic view, you'd be able to argue you want to allocate some value on the risk associated, and diminishing value of money. No way it's not worth 20% or 50% added value though for such a small amount, nor that the utility gained drops so drastically between -10 and +15. these people (same as vast majority of people for that matter) simply don't act in line with expected utility theory.


There's often a similar case in game shows like e.g. Deal or No Deal where, pure $EV speaking he made the correct decision



But, behavioral economics aside, taking the deal could be the highest EV even from expected utility's point of view, because of diminishing marginal utility of money (e.g. people above certain level of income don't report significantly higher happiness no matter how much more money they get) it could be argued the $84k premium could be worth it in that case

93% Sure! Last edit: 01/05/2015 17:47

Spitfiree   Bulgaria. May 01 2015 18:00. Posts 9634


  On May 01 2015 12:14 tomson wrote:
Cool, read a chapter about this in 'Thinking Fast, Thinking Slow' by Daniel Kahnenman just yesterday.

Research shows people the threshold point where people take the bet is somewhere between 1.5x and 2.5x the amount they risk.

It might not seem logical, but from a evolutionary standpoint it makes sense - risk averse individuals were more likely to survive.


It's what Marius's posts are based on as well. That book is so genius and hard to perceive fully it hurts my brain.
There are lots of factors that come into play in this situation, but mainly it's the nature of people not being intuitive statisticians and safety.
Plus I think being risk averse and not taking chances when your edge is small is one thing, but not taking chances where you have a huge edge is pretty bad

Deal & No Deal example is kind of off topic, since its about life changing money and while you essentially lose value its not a situation that will happen ever again so taking the deal eventho its about -20% under EV is obviously justified

@Marius about good/bad situations It's just that its in our nature to remember the bad things in the short term, while we remember the good ones long term, we're programmed so randomly, wouldn't be surprised if the ratio is 2:1 good/bad for short term to feel happy though

 Last edit: 01/05/2015 18:04

Mariuslol   Norway. May 01 2015 18:28. Posts 4742

I can't remember to well, I read the book when it got released, but I was pretty sick back then, and I'm not good enough in English to read it at a fast pace, had to look up so many words. But I think it's from that book as well, how our memory is sto..... Hmm, wait a minute.... No I think it's another one, i think what I'm about to say is from Moonwalking with Einstein, yeah, that's it.

Anyway, our brain doesn't store memories like most people think it does, it neglects, and shooes away everything that's normal, mundane, day to day, and stores highlights, and lows, most of the thing in the middle (most of what happens to us), is lost.

Like, imagine you went on holiday, it was really shit, 2,5 weeks of pure shit, bad weather, diarrhea, you name it. But then, when it's 2 days left, you randomly stumble into a gorgeous blonde, and she just happen to have a life long dream of having sex with a man from Bulgaria!!

Now when you go home, a little time passes, you'll have "amazing" memories from the holiday, even though just 1-2 days were great.


Also like, if you go to get ur rectum checked, even though most of the day was really nice, but if it was super painful, like 2 min of pain around 7,8, then back to normal, then most of the day pretty damn nice.

In the future, the day will be "terrible anus pain".

Ok, you get the gist of it xD

Oh, ps, I don't think we remember when things happened either, we remember last time we were remembering.

 Last edit: 02/05/2015 06:52

LemOn[5thF]   Czech Republic. May 01 2015 20:23. Posts 15163

Yeah that's why there no such thing as realism, the world's way too complex and we make sense of it using our unconscious ("irrational" brain
Also why 99% of arguments make no sense, both people are right from their understanding of reality and their selective memory

Also why when you fuck up with a girl you just pull away wait until she comes back - means she forgot the mundane fuck ups you did that everyone does and only the exciting highs are left



People just don't and shouldn't behave in accordance to standard economic models, it doesn't mean we are stupid, we just are that way because that's what got us here in the first place, evolutionary speaking - that's why the experiment is not surprising, and similar ones have been replicated hundreds of times with significant samples. Hell I've even tested the Endowment effect in my undergraduate dissertation

93% Sure! Last edit: 01/05/2015 20:28

LemOn[5thF]   Czech Republic. May 01 2015 20:31. Posts 15163

Brings back memories though :D
Speaking of not maximizing EV because of evolutionary coding creating frames, selective memory and prejudices:
http://www.liquidpoker.net/poker-forum/963929/Is_this_wrong_.html

93% Sure!  

LikeASet   United States. May 01 2015 21:01. Posts 2113

omg had to stop watching around the 3:30 mark because I was starting to rage.


Trav94   Canada. May 01 2015 21:04. Posts 1785

But should he have switched cases?

edit: The more I think about it the more I come to the conclusion that you had a 1/26 chance of picking both the $1 and $1mil case at the start? So switching would be irrelevant. But because there's 7 $1mil cases in that special episode (I think), would it be more +ev to switch?

 Last edit: 01/05/2015 21:16

Spitfiree   Bulgaria. May 01 2015 22:10. Posts 9634

Intuitively I'd say yes, but I can't rationally explain it and i don't think Monty Hall experiment is valid in this case


 
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