Let’s assume there are 10 candidates with a 1% chance to win each, and 9 candidates with a 10% chance to win each, as given by betting odds. Let’s also assume the odds are off by 2x for those bottom 10 candidates, and 1.1% point for the top 9.
The smart move is to bet on the bottom 10 candidates because your expected return is much higher than expected.
However, you still have an 80% chance of failure. That’s fine if you have enough instances to bet on, but you have maybe two or three in a lifetime. That’s not a high likelihood of winning long term, not to mention that most of your bets will fail even if you win once.
But that’s me thinking from an investing perspective since I’m not a gambler.
Yeah, here’s how I think about it.
Let’s assume there are 10 candidates with a 1% chance to win each, and 9 candidates with a 10% chance to win each, as given by betting odds. Let’s also assume the odds are off by 2x for those bottom 10 candidates, and 1.1% point for the top 9.
The smart move is to bet on the bottom 10 candidates because your expected return is much higher than expected.
However, you still have an 80% chance of failure. That’s fine if you have enough instances to bet on, but you have maybe two or three in a lifetime. That’s not a high likelihood of winning long term, not to mention that most of your bets will fail even if you win once.
But that’s me thinking from an investing perspective since I’m not a gambler.
I think the idea is that there are other events with similar risk profiles, the papal election is just an example of one.
Could you give a few examples? The papal election seems very unique.