Dan wrote: "To actually come up with a meaningful value for CE for a play requires
each player to somehow quantize his/her emotional tolerance of Risk. I
don't know how to do that. Before using CE, I suggest someone should
come up with some way to assign a number to one's emotional tolerance of
risk."
True. A degenerate gambler would take a gamble even if the EV was less than the guaranteed amount, and a totally risk averse person would never gamble and would always take the guaranteed amount. You see this at drawings where the prize is say $1000 freeplay or $100 cash and many people take the cash.
I should have specified the Kelly CE, which is approximately EV - Variance/Bankroll/2. Kelly made certain assumptions to derive his CE, so if you disagree with his assumptions you would probably disagree with his approximation for CE.
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Posted by: nightoftheiguana2000@yahoo.com
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