--- In vpFREE@yahoogroups.com, 007 <007@...> wrote:
> If you believed
> your utility function were linear, so that you believed you had no
> diminishing marginal utility of money, would you still prefer the
> Kelly Criterion over betting your entire bankroll on any advantage?
I think if you had a linear utility function of money you would play maxEV strategy and max bet or bet it all on any edge, actually you don't even need an edge, you just need an acceptable win rate. If you're willing to play double or nothing for it all at 51 to 49, why not 49 to 51? Is that 2% really that significant in this case? Or how about 51 to 49 but if you win there's a 10% rake? A linear function would mean that you would fear losing it all no more than you would fear any other result, you would be indifferent to losing a dollar out of a million or your last dollar. Seems to me you would call that "someone who doesn't respect money." They would either be filthy rich from birth or have connections to unlimited amounts of cash or be an ascetic or wish to be one or simply a person who really doesn't understand money, what it takes to get it and what it means to lose it, a typical teenager?. It might also be some sort of psychological reaction, a person might be addicted to gambling and fear losing it all but would convince themselves they don't care to overcome their fear of losing. If Frank's still around that's probably right up his court.
