[vpFREE] Re: why CE is better than EV

 

And this is probably beating a dead horse but just to complete the circle you can see where that approximation I like to throw around comes from. Not only is a positive EV preferred, but also a positive CE is preferred, because it predicts future bankroll growth instead of bankroll shrinkage. So, take the CE formula, set CE>0, and solve for the bankroll:

CE=EV-Variance/2xBankroll>0
EV>Variance/2xBankroll
2xBankroll>Variance/EV
Bankroll>Variance/2xEV

That's the bleeding edge, it's normal to take at least a 2x safety factor to cover unknown unknowns, and you get:

Bankroll>Variance/EV bets

At that bankroll, CE=50% of EV, at double that bankroll, CE=75% of EV, at 5x that bankroll, CE=90% of EV, for infinite bankroll, CE=EV.

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[vpFREE] Bob Dancer's LVA - 14 APR 2015

 

Bob Dancer's LVA - 14 APR 2015

Change Coming

http://www.lasvegasadvisor.com/bob_dancer/2015/0414.cfm

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[vpFREE] Scot Krause's Slot Club Report - 14 APR 2015

 

Scot Krause's Slot Club Report - 14 APR 2015

Silverton rewards club offers wide variety

http://gamingtoday.com/articles/article/53233-Silverton_rewards_club_offers_wide_variety#.VS0cpPnF-f8

or

http://goo.gl/XP1XIl

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[vpFREE] Scot Krause's Real Deals - 14 APR 2015

 

Scot Krause's Real Deals - 14 APR 2015

Las Vegas Casino bargains and promotions

http://gamingtoday.com/articles/article/53237-Tax_day_pays_at_Mandalay_Bay#.VS0cKvnF-f8

or

http://goo.gl/p7R5Pt

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[vpFREE] Re: why CE is better than EV

 

Nice post! I've never seen CE (Certainty Equivalent} laid out so clearly before.

--Dunbar


---In vpFREE@yahoogroups.com, <nightoftheiguana2000@...> wrote :

EV is an ok beginner's way to rank plays but it doesn't take into account variance and bankroll. CE takes into account EV, plus variance and bankroll:

CE = EV - variance/2xBankroll

Example:

FPDW hand: 22299

holding all five returns 15 bets

holding just 222 returns:

deuces: 46/1081 x 200 = 8.511
wrf: 40/1081 x 25 = 0.925
5k: 67/1081 x 15 = 0.930
sf: 108/1081 x 9 = 0.899
4k: 820/1081 x 5 = 3.793
total EV = 15.058

deuces: 46/1081 x (200-15.058)^2 = 1455.470
wrf: 40/1081 x (25-15.058)^2 = 3.657
5k: 67/1081 x (15-15.058)^2 = 0
sf: 108/1081 x (9-15.058)^2 = 3.667
4k: 820/1081 x (5-15.058)^2 = 76.738
total variance = 1540

solve for when CE>15:

15.058 - 1540/2xBankroll > 15
Bankroll > 13,276 bets > 16.6 royals

So, even though just holding 222 is the maxEV play, it's not a Kelly overlay unless your current bankroll exceeds 13,276 bets or 16.6 royals. Gamblers might typically play FPDW with a 5 royal bankroll, so 16.6 royals represents a much larger bankroll (more than 3x) than typical. For a quarter player, 13,276 bets is $16,595.

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