Non-self weighting strategy
We watched Ocean’s Eleven with my older son Friday night (we’ve recently established a Friday night ritual where we rotate who picks the movie and who picks the pizza. This past Friday we did a double feature — Dodgeball, which the kids loved and O11 once the little guy went to bed).
Clooney gives a tiny speech in response to Pitt’s skepticism about his motive behind the heist.
Rusty: I need the reason. And don't say money. Why do this?
Danny: Why not do it?
[Rusty shakes his head]
Danny: 'Cause yesterday I walked out of the joint after losing four years of my life and you're cold-decking "Teen Beat" cover boys. [pause] 'Cause the house always wins. Play long enough, you never change the stakes, the house takes you. Unless, when that perfect hand comes along, you bet big, then you take the house.
I emphasized that part because it’s a catchy encapsulation of what Mason Malmuth writes in Gambling Theory & Other Topics, a book I read as a trainee. The most important principle in gambling is to employ a non-self-weighting strategy. In other words, vary your bet size with the opportunity.
I don’t want to get too hung up on whether this is the “most important” as Malmuth contends (you can certainly make the case for “having an edge” in the first place), but it might be the most underappreciated with respect to how we port it to real life. Varying your bet size in blackjack is well-understood, but Malmuth argues for more obscure examples like the brevity of the Gettysburg Address, a masterful bet on the right words and quantity of words in which Lincoln varied his rhetoric for maximal payoff.
It’s a provocative reminder to be careful where you enable life-decision autopilot. If you need inspiration to find areas of your life where you can vary your metaphorical bets, paste this whole section into an LLM and prompt it to give examples in your real life.
[There’s probably an interesting essay to be written about the tension between the value of habits vs the punchy payoff of straying from them in deliberate ways.]
Money Angle For Masochists
🔘Interview riddle
You press a button that gives you a randomly uniformly distributed number between $0 and $1
Each time you press, you have two choices:
1. Stop and take this amount of money
2. Try again
You can try 2 times total.
What's the game worth?