Rick wrote:
>It isn't always about EV. Some may be willing to trade a little expected value to get less variance; that's usually a bit more subjective of a decision. In this case, the implied trade-off is 0.22% less EV for a big drop in variance. People don't put all their money in the stock market even if it has greater expected value than T-bills, cds, savings, or checking accounts.
>
>Certainly Marc could get an
>even bigger drop in variance by playing even a higher percentage of hands at 1-coin,
>or a lower dropoff in EV by using some other trigger, so it is not clear that he has consciously made an optimal informed EV-Variance tradeoff; but his decision may also not have been as horrific as has been intimated.
Almost everyone sacrifices expected value in order to reduce
fluctuation. I assume insurance has negative expected value, but if
it sufficiently reduces the chance of a catastrophic loss, it can be
worth it. With a given bankroll, it might be better to play 1 coin
instead of 5. But that's a separate issue from trying to predict the
duration of streaks, as is the possibility that playing 0 coins is
better than either 1 or 5.
