Saturday, January 23, 2010

Rien ne va plus.

Here's a simple game - we take a well shuffled pack of cards, and turn them over one by one. If the turned-over card is red, I give you £1 - if it's black, you give me £1. This is as fair a game as could be - there are an equal number of red and black cards, so by the time we've been through the pack, we should be back where we started. And yet, it is virtually inevitable that I will take all your money and you will end up with nothing - how come? The answer is that you start with a bank of £5, whereas I start with a bank of £10. The game is fair, but there are bound to be runs of red cards and runs of black cards, and because I have a bigger bank than you, I am better placed to survive a series of unfavourable runs. You will almost certainly run out of money well before we've been through the pack. This is why anybody who hopes to make serious money betting at a casino is doomed to failure. Even if the games are fair (which they're not - the casino always has an edge) the fact that the casino's bank is so much bigger than yours means your chances of success are slim to none.

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