Would You Take This Bet?
How much would it take for you to risk $10?
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Psychological literature shows that we are more sensitive to small losses and than small gains, with most people valuing a loss around 1.5-2.5 times as much as a gain. This means that we often turn down reasonable opportunities for fear of the loss. However over the course of our lives we will be exposed to many risks and opportunities and this invariably means that taking every small reasonable bet will leave us better off than saying no to all of them.
NOTE: The video is not saying to accept every bet, only those with reasonable odds (preferably in your favour), and those which if you lose would not cause significant financial or other damage. In those cases it is wise to be loss averse!
Filmed by Adrian Tan
Thanks to Physics Girl for suggestions on previous versions of this video. / physicswoman
Nobody wants to make a bet on a coin toss from a physicist.
with a camera XD
Nukestarmaster I simply thought he rigged the way you toss the coin
Axel paxel That's slight of hand, physicists don't do slight of hand; physicists do SCIENCE!
yeah
Commodore Clusters Theoretically, yes; but in practice, the more time you repeat something, the closer it will be to the true probability.
"i need half a million views" *4.2 Million views later*
*four years later
That's exactly what I was thinking
It still shows how far he's come. He's taken the risk again and again. Its paid off.
4.3 now
Deniz Iyigun - you are looking at the subscribers. It’s still only 4.3M views
As a former poker player I saw the 12 bucks for 10 bucks bet as an absolute win, and repeating it multiple times is just heaven then
bad poker player! He was clearly about to offer 15/10, if you refused the 12! :P
@@todorkolev7565yeah, did a deep dive on this guy. You are absolutely right about his lack of poker skills. Never played any noticeable poker EVER. Might be a Russian bot.
Same thought. Poker has taught me so much about odds. Always thinking of the long run. 😂
I am a paralegal and I do criminal law. We have clients with cases that are easily winnable but they opt for the sure conviction with a plea bargain rather than taking the risk and getting an acquittal. I have never been able to understand the mentality, until now.
If a stranger would offer me this bet, I would immediately assume it's probably a scam. Am I the only one?
I spent some time assuring them it wasn't a scam and that I'm not talented enough to be a "street magician"
but what if there is a cameraman right next to the stranger?
deicidaltendancies The fact that you chose your side of the coin in mid air makes it unlikely to be a scam (check the dude's hands before though)
Factual 5-ive just seen your newest one, i liked it, keep it up. The quality of intro/outro could inprove but that'll happen over time. Youve got a new viewer!
yes, I would have said no not because I don't like the risk, but because I would think it's some kind of scam. Especially if the guy is smiling so much.
Just run away if you lose, giving you a 100% chance of not losing 10 dollars.
*Outstanding move*
The best part is that the other guy can't do nothing with it
*Stonks*
Veritassium: "pulls out gun* "no so 100% now are ya"
Stellular Nebulla cursed comment
I was shocked to see that no one took the bet easily.. because my father played this game with me various times and in that i was ready to lose my money(although i don't have much money).. but he wanted us to learn to take small risks.. from there I learned not to think about small losses much and it'd helped me in taking some decisions quite easily..and plus i feel more confident sometimes iykyk;)
Sound normal to me, to the people in the video it's a one time thing that most definitely not going to happen again. So in their head it's all about the very permanent lost they could experienced. Losing the 10$ for no reason at all. Until there was mention of multiple throw that is. But for you it isn't a one time thing. You and your father play this regularly. You know you'll have a chance to making your money back and/or win more than you started with. And even if you didn't end up on top by the end, it's not a loss as bad as with a stranger since your father probably have spend money on you at many occasion unrelated to those bets.
@@Ruchunteur yea that's a good point👍
Hi beautiful
We don't know how many said yes
low iq bro
“This video will only make money if half a million people see it” - Gets 7 million views and counting. I guess in this case, everyone is a winner ❤
LOVE FROM 365 GROWTH CHALLANGE 🥰
Real abhi and niyu?
Here after watching sapne vs everyone
godi
i'd say let me flip the coin... then just run of with it. INSTANT PROFIT
Lol... Nice one bro...
haha!
Stonks 📈
STONKS
XD
For those who are wondering, I convinced my interviewees that the bet was not a scam: they could inspect the coin, flip it themselves, use their own coin etc. I explained that the experiment was intended to explore their approach to risk. It was fear of losing $10, not distrust, that led them to decline the bet.
It looks like a typical trick where no matter how much they inspect the coin and convince themselves that its legit, they cant win. TV has made them biased.
Wow! I really like these social experiments, keep it up!
Would of taken the even money bet just for fun, with my own legit coin even if you let me inspect yours. I rarely go to the casino but when i do get the chance to go i have a good time even if i lose a few dollars.
I was really surprised by how some even looked a little offended when you mentioned they would have to bet $10. It's not until the odds are ridiculously in their favor that they even begin to consider the possibility of betting. I wonder if this has any correlation to how fairness is perceived/demonstrated? In the end, the only fair bet was the first one, yet they all vehemently refused it. For that its worth, I would have bet on the $10 for $10 one, and even if I lost, I'd be happy giving you the money, knowing I'm supporting more of your videos!
They could have still been afraid you could have switched the coin for a different one via sleight of hand. Anyway, you really should discuss the Kelly Criterion as well. You may be interested in the other comment I just left. Here it is copied below: At first I thought they were just thinking that it's not a fair coin or that you will swap it with a two-headed or two-tailed coin via sleight of hand as soon as they call it heads or tails. That's what I would be worried about in that situation. But if I were to be convinced you were going to play fair, I'd wager 10 dollars to get 10.10. HELL, I have bet as much as 200 dollars on a hand of blackjack just because the count got up to +10 or +12 with barely one deck left in the shoe, and that's only a 3% or so edge on the house - and then I could very well end up doubling down or splitting the hand on top of that, making it a 400 dollar bet. If I'm willing to wager 200 or 400 when I have a 3% edge, you can be DAMN sure I'll be willing to wager 10 when I have a 20% edge or later on in the video, a 100% edge or 200% edge, I won't be one of these pansies who's like "oh, ten dollars (what is that, Australian dollars? Canadian dollars? They're not even worth as much as normal dollars either way), that's just such a SCARY amount of RISK." And those people probably have more money to their names than I do to boot. What a bunch of irrational little wimps. By the way, if you flipped the coin 100 times, you would NOT be sure that it would be between 45 and 55 times heads. The standard deviation is 5 flips, which means that thereabouts of only 72% of the time, will the outcome be between 45 and 55 out of 100. The other 28% of the time, it will surpass 55 or be under 45. There's one thing you need to talk about though. The utility. Also known as logspace expectation, also known as the Kelly criterion. In other words, suppose you were given the opportunity to take this bet 100 times in a row, but you only start out with a certain amount of money, and you're not forced to bet 10 dollars in order to win 12, but rather you can bet any amount you want, and if you win, you win 1.2 times what you bet. So you could bet 1 dollar, and if you win, you win 1.20, otherwise you lose the dollar. What should you do there? The answer in this case is, you bet 1/12 of your money, every single bet. If you start with 100 dollars, you bet 8.33 dollars. If you win, you have 110, so you bet 1/12 of 110 or 9.17. Now suppose you lose this time. Now you're down to 100.83. This has the property of maximizing your median performance. Median performance doing this is for you to multiply your money by a factor of sqrt(12.1/12)=1.00416. Median performance starting from 100 dollars, after 100 bets is $151.43, after 1000 bets is $6339.60, and after 10000 bets is 1.048 times 10 to the 20th power dollars. Oh, if only that was what you could expect out of blackjack. Unfortunately, contrary to what you've seen in movies like rainman or 21, the edge is VERY slight - typically, you would take about 50 thousand hands of blackjack to double your money, and they will kick you out (or take you out to the desert and leave a piece of you here and a piece of you there) long before you play that many times.
its been 9 years and i still love your old vids as much as the new ones! you are like a role model for me and i love evrything you do pls never stop :D
Not sure exactly how or why I ended up back at this old video but I'll tell ya...it's the message I needed today!
imagine being the guy who took the bet and won $10 and then you see the video and realise someone else got $20 out of it just because they were more sceptical
lmao Id be mad
@Kate Katz you okay?
That's what stock market is doing these days.
I’d be happy. I won 10$
It should be obvious that the guy doing it for even money, just likes the thrill of betting and is not "risk adverse" to losing only 10 bucks. So he wouldn't care what others won. If he watched the video, it probably was more life affirming than you understand.
A little extra math for anyone interested. The long term expected value was hinted on in the video by saying that over 100 bets, you expect to win $500, with a 1/2300 chance of losing money. To explain this better you have to understand the relationship between expected value and variance (or standard deviations). In his 10 vs 20 bets, the player's expected value is +$5 per bet. The standard deviation of each bet is $15, that is to say the player's expectation is $5 +/- $15. Now, in the long term, expectations are linearly proportional whereas the standard deviations are proportional to the square root of the number of trials. So for 100 bets, the player's expectation is +100*$5 (+$500). The standard deviation is sqrt(100)*$15, or $150. One standard deviation away from the mean encompasses roughly 2/3 of all possible outcomes. Therefore the player after 100 bets, has a 2/3 chance of being up between $350 and $650. Apply that math even farther, say 1,000,000 bets. Expectation = $5,000,000 Standard Deviation = sqrt(1,000,000)*$15 = $15,000. As the sample size grows, the standard deviation becomes a smaller and smaller proportion of the expected value. This is the math that card counters, casinos, and even stock brokers rely on to make money.
This deserves upvoting. Thanks for the post!
If anyone has a graphics calculator with a binomcdf function, then you can easily use it to calculate the probability of not making a profit from a sequence of n bets. For the $10/$20 bet scenario, simply type in binomcdf(n, 0.5, n/3) where n is the number of bets you want. This will calculate Pr(X
Touche, Jeff Mcafee. Touche. ;)
someone is a fellow pro poker player :)
2SavicM Profitable hobbyist, haha. Stupid UIGEA.... Relegated to bricks and mortar until I man up and move to NJ/NV
I'm so glad that there are people like you who spread the knowledge instead of dancing in front of a camera for attention. Keep up the good work mate. 👍
I immediately thought of how funny it'd be if Derek, out of nowhere, starts dancing in front of camera to 'firefly in a fairytale '
eh?
I still share this video all the time. Thank you for being you. Thanks for inspiring my own KZhead channel. You're amazing and thank you again. Cheers good person :)
I wouldn't accept the $12 bet... But only to get him to increase the odds
I would do for 20 if he wasnt a stranger to me
So, you do a metabet, risking a bet worth $1 ($12 times 0.5 win probability - $10 times 0.5 loose probability), for a better bet. How would you rate the odds, he would have offered you a better bet?
@@Viertelhund what u mean
@@ashtar3876 Sorry, my bad. I wanted to answere Tasman (decline $12 bet to get higher bet). I'll change that.
Increase the odds of a coin flip AUTISMO?
"Only gonna make me money if like half a million people watch it" sees the "5,180,815 views" count* huh, he made profit I guess
he did indeed profit
He took his bet on this video having enough people watching, and he won, proving his point.
5,240,181 now [2nd july 2021]
It's fine we all learned
@@rizkiyoist Hahaha
Hey! You're in Australia! I just discovered your channel this morning and binged a bunch of your videos 🙂
What a fantastic video. Thank you for showing me this perspective.
People in this video: "nah i dont like risk" Me at the casino " betting 10x the money and half the odds in this video"
@@equipt3065 Worst strategy ever. Only way to win at the casino: stay away from it or just go play poker when the other players are donks.
@@equipt3065 its called the Martingale betting system. And its only only one of MANY betting strategies... Reverse it, and double your bet every time you WIN, and start back at baseline after you lose, is another one I prefer...
Hokeypokeyy you used quotes instead of * lmao
@@equipt3065There are two reasons it's not a good strategy. First, a long string of loses could break your budget . secondly, the table limits prevent you from chasing the bet forever.
Congrats for 666 likes
Try it with 10 cents dude. People may agree 2:1 ratio .
KNOVELGEN it’s called Weber’s law, humans think logarithmically that’s why
But in this case you wouldn't be afraid of the loss
Right about where I am at 2:1 money and let's roll as many times as you like :-)
Only if your salary/income is like $5 per hour or less.
@@jackbrennan3709 so true
I think it's not only about feeling about gains and losses, but also about what the relationship is of the money against your overal budget. I wouldn't take the bet if I only own 10 dollars, but easily accept it if I had 1000. Also, I wouldn't probably accept a bet of a random stranger because you probably have something fishy to do: no one gives away free money.
except mr Beast
What you're describing is basically bankroll management, and it's a pretty important part of optimal betting. In fact, thanks to a formula called the Kelly Criterion, you can even calculate how much 'bankroll' you'd need to have to make the $10 for, let's say $20, an optimal option. $10 to win $20 is 3.00 decimal odds, and the probability is $50. To make this wager in an optimal way, you'd want to have at least $40 available, as Kelly Criterion recommends a 25%-of-bankroll wager with those odds and that probability. Having a larger bankroll than this is fine, but having a smaller bankroll (which means you'd be betting above the KC recommendation) can actually lead to losses in the long run despite the individual bet being +value, depending on how far over the recommendation you go (that is, how small your bankroll).
Just popped up on my homepage, 8 years later, given the number of views, I'd say it paid off :) Great content, as usual!
This is how cs go deranking actually is you rankup you feel good you derank you wanna die inside
That is why I only rankup
+Chase591 kek
+Pokeclipse and thus the smurf came into existence.
+Cup Smurfing is about trolling and recking people who are not as skilled as you. Not about ranking up.
+TomCS Smurfing is when you create a new account and play on it, it doesn't have to be to troll people that are worse than you. You can be silver 1 and create a smurf.
When he added $2 to the original bet, mathematically that made sense to me. I would have taken it. Then he added up to $10 later? I was the sucker.
made me upset when the chick said that playing the game 20 to 10 x100 was not fair... that game I would play every single day
@@oerlikon20mm29 I felt like she wasn't even understanding or trying to tbh
@@oerlikon20mm29 she was just dumb as f** lmao
My first thought when he added 2 bucks was how high was he willing to go.
@@comercialcro107 Yeah, like man he expalined that to her and she still got it wrong.
awesome vid and message, made my day
Just cant believe how far Derek has come, asking people to share the video to people searching for a bit of Truth.. the bet paid off Derek, cheers.
These people need to take a stats class. You have to be insane not to take a 2:1 bet especially when done 100 times
I mean I just think that generally you don’t bet if you have choice no matter the odds.
I know that girl was getting on my nerves in the dress! “Not even a 100 times?!” “No..” Like it’s $10 to $20 she can’t be that dumb
@@Yafama You're always betting though. Nothing is certain anyway. And if you know the odds are in your favor, you're passing up free gain.
Yeah seriously. I learned that in 9th grade I think.
if you dont bet.. you dont have a risk at all.. %100 guaranteed safety there.. why would i leave my %100 to some %45 to %55 ?
A guy goes up to the bar owner with a wager "I'll bet you £100 that I can piss into a beer glass you hold in front of you from 3 feet way" barman grinned from ear to ear and agreed. The guy pissed all over the barman, not a drop went into the glass. "Guess I missed. Here's your £100." He then walked outside and collected a £500 bet he'd won from his mates.
LOL PROFIIIIT
😂😂😂😂
Desperado
Almost like the Quentin Tarantino joke
i mean, will 400 dollars cover your medical bill? cause u will get beaten
Great video. Eye opening. Thank you
We watched this in my statistics class today. Makes for a great discussion.
My very first thought when you offered 12 versus 10 was, "Only if we can flip it 100 times". This showed me I should hold out for the 2:1 bets.
Yeah - me too. Then when he ups it to $20 to $10 for 100 trials, I was getting excited. Calm down, Fido.
On the 2:1 bet you'd still have to win 34 of these coin tosses to win some money (34*20=680 AUD won, against 660 AUD lost). And even then you'd only end up with 20 AUD won. Considering that you could lose up to 1000 AUD (if you had a really unlucky day, and yes, I know that the probability is really low), I personally wouldn't take that bet either. I would have taken the original 2:1 bet with one coin toss. 10 AUD is something I could afford losing, and winning 20 AUD would be nice.
@@MyRegardsToTheDodo 0.043% to lose money (~1/2300) and 0.00000000000000000000000000008% to lose 1000 AUD. I understand what you're saying intuitively but that is part of the problem. Human intuition is not well suited to rationalize 'very big' or 'very small' numbers. For example if I removed/added 10 zeroes from the 2nd probability you wouldn't 'feel' the difference even though its HUGE. You would still just be classifying it as a 'very low' probability.
@@MyRegardsToTheDodo To put the 2nd probability into a bit more perspective. If you could repeat this bet every second since the universe came to be till now (13.82 billion years) it would STILL be 'really low' probability that you lose 1000 AUD just once. More specifically 0.000000000003%. Even this number is hard to grasp. If you did it every second for 100000000000 of the lifetime of the universe you would expect to lose 1000 AUD once with 3% chance.
Lies again? Gamble Bet
“But then I’d be losing $10 each time”... where did he find these people?
bruh
the average person is an idiot
@@Blox117 Actually, the average person is average intelligence, by definiton.
Australia
Melbourne
Thanks, I needed this
This man melts my brain with information and I love it
You forgot to account for the expected value of "guy is going to raise the value of the game if I refuse"
The moment he offered to bet 10-12, I'd have asked how many iterations he'd be willing to do. The more the better.
Because you didn't forget the math and critical thinking that they taught you in school at the instance you graduated unlike a considerable amount of the population.
@@ofsabir huh makes sense
I would ask to play the game infinitely many times.
Same. It's free money, baby.
You missed the entire point of the video. The point was if you're willing to take that bet a number of times, why are you not willing to take that bet the first time in isolation? Go back and watch the second half of the video.
Very good argument put together
4:53 Thank you for hitting us with such surprisingly wise words.
I'm a poker player. $11 is all it would have taken me, in theory, to accept the bet. But I'm also a negotiator. So you would have offered $20 before I said yes.
You sir, are a strategist, I applaud you for being above the common rabble.
This reminded me of Log Horizon for whatever reason.
Very well done, sir.
Yes Kalterarm, taking the bet is rational. But you missed my point. When someone offers you a rational bet, but is willing to negotiate to give you an EVEN better odds ratio, it's better to go for that. It's MORE rational.
***** I don't think you understood the point of this video...
Well Veritasium you made your money back , congratulations
Internet Explorer :D
OH MY GAWD!
wow you are actually right
idcaf Internet Explorer knows everything , that's why you should use me
oh my gawd.. Internet explorer finally loaded the page
can anyone realise how subtly Derek teaches us a valuable life lesson in a very fun way. I love him
Thank you so much Veritasium 💟 I am following you for years now, and just came across this video. Had a very rough year, mom passed away, broke up with my girlfriend etc. I am 31. Studied mechanical engineering, BSc, and MSc. And have my masters in science and innovation management. In a sense I am lucky, giving the state of the world. Last year I stopped working, and couldn’t find purpose, wasn’t trying either btw. Finding purpose is a gambling game of it’s own, but you have to ‘play to win’. If you ain’t gonna move, you ain’t gonna groove 💃🏾 so to speak. From tomorrow on, I’m going to participate in life again, and ‘betting on heads’. In a 100 times saying yes, my chances are better to find what I am looking for, then not ‘playing’ at all. Much love from Amsterdam 💟
how is it going?
Caveat: Never. EVER. Take a bet you can't aford to lose. Even if the odds look really good.
For sure. A few months ago, someone stood to gain $500,000 (or something like that amount) on a steeplechase horse race if a very big favourite won (he had a combination bet on several of a trainer's horses that he made months in advance not even knowing if those horses would be in those races). He took a deal with the betting company that said he'll win $300k if the horse wins and $200k if the horse lost. Most people congratulated him and said it's a good call, but a few people chastised him, saying that what he did was a bad betting decision and "bookies love when you cash out." While they may technically be correct in that the deal was mathematically unfavourable, $200,000 is a life-changing amount of money. This *is* a one-off - it's very unlikely he'll ever be in that situation again - so it's absolutely the correct logical decision to take the offer because one's life will be substantially improved by making it. Math is king when trying to make a profit from gambling, but in exceptional circumstances, you have to take a step back. The horse the original bet was riding on fell at the first jump and did not finish.
Afford to lose then.
@@JohnDoe-uu9gh how much he had to pay to enter this bet?
This is concept of "risk of ruin". If a gambler bets all his money, and loses, he can make no further bets.
AGREE, the reality is that no-one (with the exception of an psychologist or a you-tuber) is going to deliberately offer a value bet.
“If this video gets 500,000 views it will be a positive bet” Video currently sitting on 4.8 million views
Almost 5M to make it sweet bet!
Stonks!
5,099,700 views
5.1M now
5.2 now
I love this guy's videos.
Funny enough it's a behavior that I experienced even in video games where there is no real stake. When presented with two piece of equipment and that you can only use one and that those two pieces of equipment are roughly equal in value but give different stats I had the tendency to favor the piece that I was already wearing. Even if the other piece gave a little bit more stat overall, the fact that I was trading away the stats that I already had for another stat felt like a loss even if in the end the value of those stats were roughly the same or very slightly higher in the new piece (I'm thinking of "Loop Hero" if anyone was wondering)
Losing money you accounted for > gaining money you didn't account for Stability has a value of its own.
but you're losing money that you could have been accounted for if you took that bet, so if it's not 1:1 bet you are losing money
@@iSammax no, you can't lose what you never had.
@@BethanielThe3rd But you can not gain what you would have gained
Very Rational ! Always I have more eager to lose money when i have extra
bjerne yeah but stability, I mean what is the point
the man that never took a chance never had a chance
holy crap
True but the man who took a chance had the chance to lose it all.
Georges! What the heck are you doing here!? Get back to gym, we want to see you fight again! :P :P :P
Glad this bet turned into a positive outcome for you Derek. 7.5 million views is 15 times what you expected before you see gains.
So....what was the original title on this one? BTW - I really respect what you're doing with your channel lately. Genius, really. Reap that harvest!
"I'll only make money if about half a million people see it." How about 4.1 million?
Just about enough 😉
But the advertisers don't necessarily still pay for those specific ads as much as they would shill out for new videos getting new active views
4.4mil now i was about to comment that though
I don't think this has as much to do with psychology and more to do with people not understanding probabilities. Loss aversion is a real thing but you've got to control for people being ignorant of maths. Try this with third year maths students at a university and see what happens then.
Haha, that's true. I learned this last year as a Freshman in high school :P
I'm sure that's true. I don't understand probabilities even after it's explained to me.
Exactly. I'm a first year maths student and my question to the first proposition would immediatly have been "how many times can we do the bet over?". I think anyone can understand that the more you go for such a bet, the more the results will come close to the probabilities though, so obviously there must be some psychology involved. This is the Monty Hall problem all over again in a way. :)
I don't think it's that. The math is easy in this case. We know the logical reasoning dictates it is better to bet. But in our brain there's a risk, and you must avoid it.
André M. Santos yeah that's why I find it astonishing that people refuse the bet even when given a hundred chances. The maths there make it a virtual certainty that you'll come out on top. I think some people in this video just didn't get it. Lots of people are irrational and superstitious when it comes to gambling.
Such great analogy to investing. I definitely will use this in my financial work.
Risk aversion may also depend on a variety of other factors that influence decisions in the moment.
And this is why casinos make bank. The average person is clueless when it comes probability.
That is a factor in some casino games, but most are mathematically rigged so that the house wins over a period of time.
That's why I don'T go to any casinos.
I doubt casinos make much money on people who dislike betting even against winning odds. Besides, no matter how good your understanding of probability is, you can’t influence what’s going to happen. I teach maths (and therefore probability), but I’ll be the first to say I would never take any of those bets, not even the “100-pack”: a 1/2300 probability of losing money is still uncomfortably high for my tastes. Knowing just a little bit of probability is pretty dangerous, it leads you to believe blindly in expected values and forgetting about the variance.
@@hujiklo9205 I’m fairly sure I was replying to someone talking about casinos.
or you know, the average person knows that a guy that approaches you on the street with an unfavorable bet possibly has sleight of hand, weighted coins, obscured variables, etc.
My friend and I repeatedly flip for a dollar when we hang out. The expected monetary value is $0 but we still do it because it generates entertainment for both of us, which in itself has value. Effectively, we are generating value out of nothing.
I'm thinking about this way more than i should lol. I can't get over the idea that it generates value from nothing. A dollar has a tangible value. One of you had to go out and acquire that dollar. This comes at cost of several things. To go out and get money you need to be fed, rested, clothed, groomed, transported etc. Getting that dollar in your hands required spending other dollars. The entertainment value of flipping the dollar is more like a dividend you get for owning it. Which isn't exactly like generating value out of nothing. Prior investments were made to allow the generating of value to occur.
@@stevenclaeys3602 i think your overthinking this comment
@@stevenclaeys3602 Yes "out of nothing" is wrong. It should be generating value/entertainment out of a dollar. But your comment is also somewhat wrong. You are assuming they are taking specific action thus not creating value out of nothing, but in your example (creating value out of related actions and previous investments) to achieve the result which is entertainment from a dollar, when they for example most likely just have some dollars lying around in their wallet from previous unrelated investments/actions. Their previous investments and actions were made for an unrelated result and outcome, therefore they have not invested any time, actions or values in directly acquiring the dollar which they used to get the result "entertainment out of nothing" Even though it would be more correct to phrase it as entertainment out of a dollar.
@@matthiashungnes7832no i see it the same way, i never assumed or meant to imply that their actions taken to acquire the dollar were taken specifically in function of later flipping it for fun. Yes, the previous actions were taken for unrelated reasons but my point was that they had to happen regardless for generating fun to be possible in this specific manner. Thanks for joining in on the sillyness though. We're here to generate fun, almost from thin air but not quite lol
Technically, it's not generating out of "nothing." Humans needed to invent the concept of numbers, value, probability, and probably a lot of other things I can't think of just for this fun, little game.
Thank you for this video, Derek. I would also like to add that most of the time, the "loss" that we fear is completely meaningless in the long run. As Steve Jobs once said, "almost everything - all external expectations, all pride, all fear of embarrassment or failure - these things just fall away in the face of death, leaving only what is truly important. Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart." Take the risk, people! You'll be glad that you did.
Nice to see you in Australia.
This is a perfect evidence that we need more statistics in public schooling.
Your the guy from work?
Yeah, the girl refusing to bet 10 to 20 100 times really showed she had no idea what's expected value.
I agree, I personally would have demanded that I flip the coin and we let it roll to the ground, (for the sake of fairness) but I would have taken the bet.
@@paskky913 ikr lmao
If a random person tries to bet with you on a game that is obviously in your favor, MAAAAYBE there is something fishy going on. Just saying.
Thanks for doing this in Australia
DINGO FACE chatswood 🔥
Thank you for your thankfulness :)
Asha Andrew what?
@@mountaindingo2582 I am just thankful that you took the time to say thanks :-) It made me smile
@@ashaandrew6407 chatty
Daniel Kahneman’s thinking fast and slow explains this phenomenon very well in part 4 of the 5-part book. Would recommend to read about loss aversion+prospect theory.
This is such a good book to read honestly. I remember finishing it last year and the whole idea of sub conscious is explained really well
Actually watched this when initially uploaded . . I see now nearly 7.5million views . . Guess this one was a good bet😜 love ya work!!!! Cooee cobber👍🏽
I love how at the end of the video, he accidentally gave you the advice that you can get better odds by just refusing to take risk unless and until you get better odds (one guy wins $10, the other $12, the other $20). Which, well, to be fair, is also good advice: Make sure to spend your limited energy on the best bets
Another way to think about this is: Try to increase the odds in your favor before you take the bet. If this is an allegory for life choices, rarely will the odds be clear and numeric. Your choice might be to apply for a new job. You can potentially raise the odds in your favor before you "take the bet." You can update your resume. You can research the employer. You can think about how you want to present yourself. These are all ways that you're increasing the odds; you can't quantify exactly how much, but you're relatively confident that the net effect is positive. It's not just about the Yes/No decision, it's also about the preparation to give you better odds.
There's some parallel here with the sports betting world. Odds change quite frequently before an event starts, particularly as it gets closer and closer. Odds are vital to whether or not a market is + or - value, so having them change is extremely important. As an example, I'm looking at a market right now that's close to good enough, but not quite there. I consider it -value right now, so I won't take it. But I'm watching it, and if it moves slightly in my favour, I'll be all over it.
He flew all the way to Australia just to use our AWESOME bank notes
He lived in Australia when he made the video
He wanted to use the most colorful notes on the planet.
@@jonesr227 Switzerland has pretty colourful notes I seem to remember
Alex the euro?
If I remember correctly, he was born there
I have just finished reading "Thinking fast and slow" by Daniel Kahneman and I definitely recommend it to anyone interested in decision making and loss aversion. When this video started, I already knew that people would reject the bet! ;-)
Yep. People are stupid. Reason why most of the population is stuck working their entire lives while I'm retired in my 20s.
This is the most entertaining demonstration of {risk aversity, utility function, behavioral economy, law of large numbers, binomial distribution, ...} I have ever seen.
"Just a feeling one gets when presented with the opportunity"
what an absolute idiot
@@tengems8437 how is he an idiot when he's right about it being worth more? As somebody who's actually studied stats and finance and knew the actual answer why, I think it's impressive that he arrived at it just through intuition.
Mitchell Dale you don’t need to study stats or finance to understand basic odds. This is all covered in grade school mathematics class.
Listened exactly in the Video to the sentence when I read your comment 😂 wired feeling
@@veud I think you spelled “weird” wrong
Redditor with 194 IQ here, This man is clearly not an alpha male like myself. What i'd do is take the bet, and if i won, take the money. If i lost, i'd laugh in his face and walk off. If he tried anything he'd get a taste of my black belt karate. Doritan Cheeto Redditor - Atheist - Brony - G(ent)leman - Top Mind Moderator of /r/karate
Reddit circlejerk is exactly what youtube comments needed.
So with your incredible intellect you have decided to accept chaos as being fundamental and immutable? Why?
you forgot to tell you are a virgin too.
Either your'e trolling, or you're just desperately swimming in your own arrogance.
Funny thing is that being alpha and high IQ are mutually exclusive.
If anyone is wondering, this is from Kahneman and Tversky’s (1979; 1992) Prospect Theory. And also Rabin’s Critique is pretty neat (Rabin, 2000; Rabin and Thaler, 2001).
It’s an established and robust phenomenon at this point
True - your interviewees didn't seem to understand probability of expectation and I think you make a good point about fear of loss being greater than happiness over a win. But there may also be subconscious retroductive logic going on as well -- that you wouldn't be making "stupid" bets in the interviewee's favor unless there was a trick involved (scam). They may have just been polite in appearing to accept your assurances. Also, there's another fear -- looking stupid on cam. I love probability & use it every day, but would've been hesitant -- but I'd take your 2nd or 3rd offer (odds in my favor) just to possibly learn something for only $10. Thanks for so many interesting videos!
3:20 wtf so stupid. If it's a $20-$10 bet, and the probability is 50/50, and you flip it 10 times, statistically speaking you will walk away with money almost guaranteed.
DoglinsShadow Dude did u watch the video?
Not guaranteed because of trends but way better odds then the stock market so its a good investment
Ikr that woman just triggered me so much when she said that. I know that's mean of me but it just worries me that people don't think very simple things though
I thought that exact same thing.
DoglinsShadow na mate, probability is defiantly not the same as real life, u are more likely to gain money but if you are very unlucky you would lose $100
Once you raised the offered reward stepwise, you introduced another complexity: The more hesitant a participant is, the more they are offered. So (subconsciously) it makes sense to just wait what your true highest offer is.
lmao thats going against the video's message. Declining an opportunity because a better way may come is more of a risk than what u had in the first place.
There's probably also a trust factor. There's an aversion to being tricked or scammed. But mostly, some of these people just suck at math.
Yeah, if he approached me, I would have probably gone with the $20 offer, then kick myself after watching the video
they had no way of knowing the money would increase though
@@paulwal222 Add the complexity of real-life decisions. Sure, a coin is easy to calculate, but usually risks in real life are far harder to evaluate. And if a random guy would offer me a bet on the street I would assume it's a scam.
Its a very inspirational video stock market traders etc
I came a little later here and yeah, there's a little mote tham half million views, for future reference now has around 7.5 million views! Well done!
this would be a whole lot different if it were in vegas...
In Vegas, people would've taken a bet where you bet $10 and get $8 in return. He could've made some good money.
@@Exachad that's called slots
What's with Vegas?
@@Undesignedd It is a place filled with id--ts
@@indian_coaster_enthusiast idts?
I’m an actuary. This is a super simplified version on how we calculate how much we need to charge for a policy premium so the insurance company still makes money. Some people win, some people lose, but on average and in the long term, the company comes up top.
I am an actuary in process. Haha
Insurance is basically just a form of gambling where the policy holder doesn't really want to win.
@@troodon1096 lol
@@troodon1096 True, except there is one MASSIVE difference between spending your money on insurance (e.g. house insurance or car insurance) vs something like casino gambling or the lottery: with insurance your overall financial health over your life is less risky/random as the worst and best outcomes for you are less extreme, whereas with true gambling your overall financial health is more risky/random. So assuming you are a loss-averse person, insurance can and often is rational but gambling in a casino is not. If you consider the fun of a casino to be the machines and atmosphere then the negative bet values may be a worthy price to pay for you, so it i possible to gamble rationally (not that I'd recommend it). Of course when a gamble is in your favour, like the 50% $12 profit vs 50% $10 loss, then the game is different and gambling as much and as often as you can afford IS rational. It's like with applying for new jobs or taking a new course or buying a new car, if the average long term gain exceeds the cost, then it is rational to take as many such risks in life as possible because the laws of averages will guarantee with 99.9% chance that your life will be better overall. Obviously you need to look on a case by case whether a risk actually is in your favour of course
You are right as long as the insurance is about a value, you wont get ruined,if you have to pay it. So e.g. A insurance for smartphone doesnt make any sence, cause if you can afford a x dollar phone, you will probably be able to afford a new phone, if you are unlucky, and it gets damaged. Maybe you cant afford the same one again,but at least a less valuable. (it might hurt your portemonet,but it should be possible,and also even if you cant afford a new one emmideatly, with a very cheap cellphone you will be able to live your life) But lets say, its health insurance. Then the bill could get so high, that you cant afford it. It would ruin your whole life, and it will even get you to a point, where you might only take the medical care, you need to not die emmideatly. And this might not be good for you espacially at teeth care. So there a imsurance is really helpfull and also important..And if its obligatorry like in Germany, then there are by-law-insurances, and these have to be non profit. Also insurance is important for your house, cause a new one is very expensive,and you might loose a lot if something happens, and also a insurance is important, in the case you are having a car accident with either your fault, or the others fault. Cause lets say you are faulty. Well the other one will demand a lot of money from you, which you might not be able to pay. And then the other one will have nothing and you will have a mountain of problems. And lets say its the other way around: the other one hasnt got insurance,but its his fault, and he hasnt got any money. Well then you dont get anything, although its not even your fault. So in these cases its important, that insurance is obligatory by law. I mean of cpurse rich guys dont want to pay insurance, cause they are bether off without insurance, but then with them not paying for insurance,the poor guy who wants to have insurance just looses more than he already does, cause with the rich guy not paying anything,the poor guy has to pay a high bill. If the bills by law would be distributet depending on income, it would be more fair for everyone.
Another factor to consider is how much more risk averse you may become if you happen to lose, and how much more likely you are to take more and bigger risks in future if you win.
That's Chatswood in Sydney, its really weird to see such a big youtuber in a place you know well!
This is the reason why most people are not wealthy. They are too afraid to take action, take a risk, to fail in little things along the way and so on. I've seen it a thousand times. Even if the odds are stacked in their favor, even if you teach them exactly what to do, most are too scared to do it once they have to invest a dollar or do some work. The concept of work being for nothing and loosing time is just as much a loss to people as a monetary one. So most people won't even begin to, say, take action on a book that teaches how to loose weight, even though the answers are right there! The winners just do it.
That sounds pretty capitalist to me. Not everybody thinks like that, even though they where born on capitalist soil. We are free to choose responsibility and ought to take responsibility. When you fail, you'll have to compensate. It will not only be your trouble, but also your loved ones have to endure this. These people where being wise, not cowardly stupid. Winners are ones who put friends and family before their own needs.
***** , the winners we hear about just do it. The big losers - those who are renting a house in retirement because they lost everything in their business ventures - also just did it. At 60, the person who takes big risks might be living in one of many mansions, or might be bankrupt. The person who takes no big risks probably owns their own modest house. Compared to the mansion-living risk-taker, you could call them a loser. Compared to the bankrupt risk-taker, they're a winner. It's all relative.
Rutger Beuken There's nothing wrong with using a capitalist mentality in order to gain money. History has proven that capitalist societies have more freedom, more wealth gain but it's not perfect, and even cut throat. The problem with what llavenya statement is that, sure you can take risks in order to gain, its just when those risks have a hire % of factors out of your control then in your control is when you run into issues. In my opinion, the only time you should take a risk is if you can cover the cost of said risk.
I said they usually won't do it, even if you tell them exactly what to do. If they did it, they'd win. Also, this is not just about money. 85-90% of people that buy a course, be it for online business, loosing weight or other, never even open it up. Because it would be "work", and "it probably doesn't work anyway". People are too afraid of failure to even do what the book says.
what if that is just your confirmation bias?
It truly is amazing how much the quality of your videos have increased. I wholeheartedly hope this turns out to be a positive bet for you and you get half a million views (it's kinda bound to happen anyway, so) :)
let's hope!
***** At one point it may have been something like that, but now it factors in all kinds of things beyond just view numbers. Stuff like frequency of uploads, your subscriber count, how liked your overall content is, how well your video holds the viewers attention (viewer retention) etc.
***** He lost a lot of bets that day.
***** They are not allowed to talk about what they get paid. But it is around .60-.80 per 1k views Gaming videos, and videos where there is a product involved pay more, whereas something that does not involve a product, IE this channel. Pays less
***** Zsar's Wot and KSP KZhead pays something between 0.5$ to 3$ (this aumount is based on month, suscribers, viewer retention, likes etc) per 1.000 MONETIZED views, that means that not every view is making money (only 30% in general), this is because of people using Adblock and Copyright Issues, then you need to substract 55% of the money you gained because that's the amount that Google takes, so yeah you need a TON of views in order to make some money, it's not that easy.
In high school, many years ago, I always won the flip for the team or flip to my advantage because I felt the rough side of a quarter or the smooth side of the quarter with my thumb as I was flipping it to the back of my hand and made it go the way I wanted. I never lost. The coin needs to land on the ground!
This risk aversion is also observed in the stock market. When the risk free rate increases (the base interest rate increases) in addition to less money in the market, people now can make a larger guaranteed return at a very little risk. So they decrease their allocation to riskier assets dramatically.
“You miss 100% of the shots you don’t take.” Wayne Gretzski. -Michael Scott
"'You miss 100% of the shots you don't take." Wayne grertzski. - Michael Scott - Hollywoodf1
"'You miss 100% of the shots you don't take." Wayne grertzski. - Michael Scott - Hollywoodf1 - Harry Beckwith
"'You miss 100% of the shots you don't take." Wayne grertzski. - Michael Scott - Hollywoodf1 - Harry Beckwith - X eiton
"You miss 100% of the shots you don't take." Wayne Gretzski. - Michael Scott - Hollywoodf1 - Harry Beckwith - X eiton - Lazy Ro
"You miss 100% of the shots you don't take." Wayne Gretzski. - Michael Scott - Hollywoodf1 - Harry Beckwith - X eiton - Lazy Ro - ⸻⸻⸻⸻⸻⸻⸻⸻⸻⸻⸻⸻⸻⸻⸻⸻⸻⸻⸻⸻⸻⸻⸻⸻⸻⸻⸻⸻⸻⸻⸻⸻⸻⸻⸻⸻⸻⸻⸻⸻
I think we are risk adverse because we are used to being lied to. So if someone offers free money, we instantly go "what's the catch?"
@Dyanosis have you ever heard the phrase "if it's too good to be true, it probably is"?
Risk aversion and skepticism are two different things
@Dyanosis When you got to Vegas the odds are stacked against you. There are good reasons to trust them: they are not going to disappear overnight, their entire business depends on people trusting them, and the odds being in their favor means they don't have to scam you to make a profit. None of these conditions are true when playing with a random strangers offering advantageous odds in the street.
@Ellotherem8 I'm used to strangers lying to me. They lie to me constantly. I would love to meet only strangers that tell the truth. I have half a dozen that call me every day asking me if I want to consolidate debt or get a service contract for my car, or tell me my computer has a virus, etc, etc. If every stranger you meet is truthful to you, then you should consider yourself blessed (unless they are all scamming you and you just don't know it).
This is actually really intelligent explanation!! On several levels, like why would someone give you an obviously "too good bet" and offer it actively to you?? Or the Casinos in Vegas that can become difficult when they have to pay out large winnings. Or the fraud with the McDonald's lottery...
Kahneman and Tversky - revolutionised our entire perception of risk and human biases
I have actually purchased the book "Thiniking Fast and Slow" because I heard about it from an AWESOME speaker. Since then, I have heard people recommend it at LEAST 4 times. I think I need to read it. Starting now.
Winning is NOT as good an advantage as losing is a disadvantage when you are already good up. Becoming rich is not as desirable as becoming poor is to be avoided. Risk is only worth it, when you're already pretty bad up. For example in a game of incomplete information, like Dota, it makes sense to play very safe when you are ahead, but take great risks when you are behind.
Taxtro It's actually the other way around, and the reason why upper class people invest more and middle class people save more. The more initial money you have, the more loss you can absorb. So risk is actually LESS worth it the poorer you are, because you can't iterate an over 50% winrate scenario after an initial bad streak. As for games, it varies. While it is true for Dota, I find the opposite to be true for Lol - when you're behind, your best bet is to play conservatively and hope that they'll make a mistake. If they don't, then you've still dragged to late game, which depending on teamcomp will win you the game even if you've been behind throughout.
Tudor Naconecinii Well it applies when you are in a situation where you get richer slowly when you are rich and poorer when you are poor.
+Taxtro However this game doesn't take that into account, $10 won't change someone's socioeconomic status.
+Taxtro risk is always worth it so you can get richer or whatever it may be that drives you, becoming rich is much more desirable than becoming poor is avoided
+Tudor Naconecinii Upper class people don't invest more, though? It's been shown that the wealthy spend less money than the middle class.
csgolounge users can learn from this
Lol
+saltybatatas thats exactly what i thought about XD
ask deliciousmilkgg for tips on csgolounge xD he's op
+saltybatatas But that is not only luck, that is mostly knowledge of the teams, maps, lan or net etc etc
csgodouble users laugh at this.
Watching this video in 2023 and pleasantly surprised by how simple and straightforward the narrative is. At no point in the video did i have to calculate the inverse of gravity squared raised to negative pi. Not a comment on your current content, I absolutely love how you demistify complex problems and make them understandable.
very strong video great message at the end
Hi, I am a professional gambler (I trade equity options for a living). Great video, just one small note: In real life, if you end up at zero, you can't bet again, and then you are stuck at zero indefinitely and need to go and get a real job. Because once you are at zero, you have no more money to gamble with. For example: even with a fair coin toss, if you play long enough then ten heads in a row will eventually happen, and if you bet all your money on tails you will be broke. So you have to structure the bets such that you can never end up at zero, and that is where most of the challenge is because that will always introduce new constraints and added costs.
Professional Gambler? 😂😂😂😂😂 Like saying im a pro at taking shits every morning... dude youre joke and an idiot
@@WalterN34 I guess you didn't get the joke... But why all the anger?
Yes, this is called risk of ruin, and it's very important. If you only have $5000, and someone offers you a $5000 bet, even with decent odds, you don't want to take that bet. Because the chance of you losing everything is too high.
@@xyzzyxyzzy2 yep yep. I learned this the hard way a few times in trading options. Instead take a $100 bet with what you perceive as decent odds 50 times.
Well what about betting on margin, isn't that something you derivative traders do?
The video wrongly assumes the value of money is linear. For pretty much everyone it's logorithmic. To see that this is the case simply scale the bet up, instead of $10 imagine that it's ALL THE MONEY YOU HAVE. If you win you double your money, if you lose you have nothing. Is that a reasonable bet to take? No, because the affect on your livelihood if your money doubled is less substantial than if you went completely broke. The difference between having 1 Million dollars and 2 Million dollars isn't as great as the difference between having 1 Million dollars and zero dollars. Although less noticeable, in theory this principle holds true for increasingly smaller amounts, even down to a penny. The main point of the video is still true, I just felt the need to make this nitpicky caveat.
Very true; I was thinking about that, too, when he offered the even bet. I'd agree that it is objectively wrong to take the even bet.
While this is true, the effect is much lower for small amounts of money. For the average person, even $100 won't make or break them, but having an extra $100 is always nice. If you could mathematically scale the relative value of money for a person, it would be nearly one-to-one for small values and much smaller per dollar for high values.
that is true, however this is on a really small scale and wont change the outcome as its only a few dollars. When celebrities donate like a million they seem so Nice. It doesnt seem so impressive when that is only like 0.0001% of their total Money. If I give the same amount I would be looked as a cheap bastard. Its even worse when you factor in ur point. If we take 1% of the unneccesarry Money you have(lets say you need 1mill for a house and car and to be stable in life), then I have 0 to give, but a millionare is praised for giving away 0.001% of the not needed Money.
Yes Kristian, you're so right but you forgot to mention what I think is the reason many celebrities (NOT all celebs as some genuinely do it for altruistic reasons, but some) know they can offset it against their tax liability so it cost them peanuts. Actually might be the same in monetary terms as the rest of us even?
dont agree. he does not specify the relative value of the 10$ to your capital. in fact , if you can play the game 10 times, you can infer that the 10$ is at least 10% of your capital. And a 10% investment into model that has a ROI of 50% is a winner every time!!! long story short ,i do agree never to put all your eggs in the same basket, but always take the risk if you can afford it and it plays in your favor
Inspiring!
See the risks you take as part of a series and wonder is the series worth it? Seems like a very good perspective for taking decisions in life, not only for gambling addicts, but also for the risk averse.
I would have taken him up on the 12$ bet. And possibly the 10$ bet, too.
+Matthew Campbell It's a 50/50 chance that i'd have taken that bet.
+Matthew Campbell I would have taken 10.01. But not 10... +EV
+JustFactsAndOpinions exactly :p. These people are especially insane for not taking the bet once he makes it 2-1
+Matthew Campbell id bet everything i could on 10 dollar bets with 50/50 odds with 12 dollar gain. even if you lose 460 out of 1000 times (which is unlikely, you still win 120 bucks)
Both of those are bad. It's a 50% chance to gain something. 50% chance to lose something. I'd take the chance because I don't value 10 bucks, but I wouldn't take the chance saying to myself ''YES! I WILL WIN MONEY!!''.
I'd have taken the bet at $10.00 But I also like gambling (cards).
Cards depends less on gambling and more on strategy, though. Yes, there is luck involved in what cards you're dealt, but even if you're dealt the worst cards, you can still win if you use them right.
Photonic Pizza All correct, but I suppose my point was that I'm willing to take risks that aren't horribly out of my favour. .
EternalxWar i once betted 10€ at Roulette on One of those 50/50 Fields. i lost. my friend betted 20€ on it a round later and won ofc
+EternalxWar With a bet of $10, it is basically personal preference, but in theory it would be better to not take the even bet: The value of money is not linear. To a person with a lot of money, $10 would be irrelevant - however, to a very poor person, $10 would have a significant value. Since, if you win the bet, you are slightly richer than if you lose, winning the bet is of less value to you than losing the bet; that is, you lose more by losing than you win by winning. Imagine that instead of $10, it was all your money you had to bet. If you lost, you would be completely broke, and if you won, you would have doubled your money. And while having twice as much money is nice, the effect of having no money at all would certainly be more severe. What you are basically doing by taking the even bet is buying the thrill of gambling with your money for the difference of value between your loss and your win - and that's where it's personal preference, but I just wanted to say that this thrill does have a cost.
EternalxWar
0:44 "Why is that?" Because going from x to x-10 means your initial amount was a higher percentage (example 1000/990= 1.0101%) than going from x to x+10 where your final amount would be compared to your initial amount (example 1010/1000=1.01%), so the situation you'd be in after losing is worse than the situation you'd be in after winning would be good.
This video highlighted just how intuitive statistics and numbers come for some but not for most.