In the post below, certainly variance is a source of risk, although a predictable one and I would agree that player error is also a risk, although likely much less predictable. And in that sense, overbetting your bankroll is another form of player error, so I guess that can be a risk as well, depending on how you want to use the term.
What I'm getting at is whether "risk" is always the correct term here, since some of the "risks" named are not really "risks" as such, but are consciously made incorrect decisions, or are known variables, which I suppose may technically be "risks" in the broadest sense of the word - but in fact some of them are more "variables" or just plain mistakes, or a conscious decision to do something that one does (or should) know is not correct.
Therefore, technically, I would maintain that the first player error referred to is making an incorrect decision on what to hold, either due to not seeing the hand correctly or due to playing too quickly or hitting a wrong button followed by "draw" before noticing the mistake, or distraction -- and that this source of error is sometimes undetected, even after it occurs, unless you happen to spot it before the draw completes, in which case it is detected, but too late to correct it - so that could be considered a "risk" - in this case, a risk you know is there, but the degree of which likely can't be known, and certainly not in advance.
However, I would maintain that the second source of player error, overbetting your bankroll, is an "error" only if done out of ignorance (and in that case, is the same as a "what to hold" error due to incorrect knowledge of the correct strategy), and only in that case would it be an error of which one is unaware. Usually, if you understand the idea of bet sizing at all, you do not overbet your bankroll as an "error", but as a conscious albeit incorrect decision, and that's just as bad as purposely making an incorrect play because of a "hunch". It is hardly a real "risk" although it is most certainly a variable that will affect outcome - but when done consciously, it is a completely controllable variable, and therefore is not really a "risk" as much as willful incorrect strategy.
Finally, not including tax considerations is actually not a "risk" either, in my opinion, but is instead a significant flaw in one's calculation of EV. Presumably, if one complies with the tax laws, tax considerations are such a substantial negative impact on EV for those not filing as a professional, as to make virtually every slot game, including video poker, a negative EV game after-taxes. Deciding to play the game if it's negative EV, with or without tax considerations, is not, in my mind, a "risk" as one more incorrect decision -- although one can (perhaps) justify such an incorrect decision by assigning an off-setting "value" to comps (tangible) and enjoyment of playing (intangible and totally subjective).
An additional "risk" that I WOULD consider to be an actual risk is that of running out of money on a given trip when one DOES have a positive EV with everything else considered. A negative swing that is not consistent with the expected positive EV can most certainly occur due to the element of chance, and if one doesn't have enough trip money, there is the risk of lost opportunity when one has to stop playing. Even if one has an unlimited source (or, more realistically, a sufficient Kelly bankroll overall with continuous bet size readjustment as dictated by Kelly) and can "re-stock" one's playing funds, there is a brief period of time when lost playing opportunity can occur while the ATM or cashier's cage is visited.
And of course, there is a risk that one will be barred from playing.
Finally, there is always a very small, but presumably real risk that the machine is rigged (or is malfunctioning) and will not return in accordance with the posted paytable.
I prefer to think of "risk" as applying to something where I don't know how much of a factor it is -- so that unintentional incorrect plays (mistakes) are certainly a risk, while decisions to do something incorrect is an intentional and predictable (in terms of its cost) incorrect decision.
--BG
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Don't forget to assess risk. One type of risk is caused by variance, probably the best tool for that is Dunbar's Risk Analyzer, the formula for 3sd is 3 x betsize x sqrt(variance x hands). Another type of risk is caused by player error, just assuming you will get the computer perfect EV in the casino environment is naive. Another type of risk is overbetting your bankroll, namely if your betsize is more than double your current bankroll x EV / variance you will get bankroll shrinkage even with a positive EV gamble. Another type of risk is not including tax considerations which can generate another fee which you weren't expecting.
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Posted by: Barry Glazer <b.glazer@att.net>
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