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Kelly criterion - Wikipedia
In probability theory and intertemporal portfolio choice, the Kelly criterion, Kelly strategy, Kelly formula, or Kelly bet, is a formula used to determine the optimal size of a series of bets. In most gambling scenarios, and some investing scenarios under some simplifying assumptions, the Kelly strategy will do better than any essentially different strategy in the long run (that is, over a span of time in which the observed fraction of bets that are successful equals the probability that any given bet will be successful). It was described by J. L. Kelly, Jr, a researcher at Bell Labs, in 1956.[1] The practical use of the formula has been demonstrated.[2][3][4]

The Kelly Criterion is to bet a predetermined fraction of assets and can be counterintuitive. In one study,[5][6] each participant was given $25 and asked to bet on a coin that would land heads 60% of the time. Participants had 30 minutes to play, so could place about 300 bets, and the prizes were capped at $250. Behavior was far from optimal. "Remarkably, 28% of the participants went bust, and the average payout was just $91. Only 21% of the participants reached the maximum. 18 of the 61 participants bet everything on one toss, while two-thirds gambled on tails at some stage in the experiment." Using the Kelly criterion and based on the odds in the experiment, the right approach would be to bet 20% of the pot on each throw (see first example in Statement below). If losing, the size of the bet gets cut; if winning, the stake increases.
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august 2017 by nhaliday
Contra NYT On Economists On Education | Slate Star Codex
addendum:
https://twitter.com/Noahpinion/status/815108691431038976
http://noahpinionblog.blogspot.com/2016/12/who-is-responsible-when-article-gets.html
https://slatestarcodex.com/2016/12/31/addendum-to-economists-on-education/
https://slatestarcodex.com/2017/01/17/another-followup-to-economists-on-education/
https://www.reddit.com/r/badeconomics/comments/5u116o/ama_noah_smith_bloomberg_writer_twitter_economist/ddqm711/
Noah Smith being a right prick here.

36% of economists believe vouchers would improve education, compared to 19% who disagree. The rest are unsure or didn’t answer the question. The picture looks about the same when weighted by the economists’ confidence.

The correct way to report on this graph is “About twice as many economists believe a voucher system would improve education as believe that it wouldn’t.”

By leaving it at “only a third of economists support vouchers”, the article strongly implies that there is an economic consensus against the policy. But its own source suggests that, of economists who have an opinion, a big majority are pro-voucher.

(note also that the options are only “vouchers will improve education” and “vouchers will not improve education”, so that it’s unclear from the data if any dissenting economists agree with the reporter’s position that vouchers will make things worse. They might just think that things would stay the same.)

I think this is journalistic malpractice.
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december 2016 by nhaliday

bundles : abstractcoordprediction

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