Last week, a gambler told us his idea of betting money. The man had drawn up various precepts from his life experience. About using money in gambling and in other situations he used the rule: you bet money for experiences.
His explanation was that you quickly forgot the amount of money. But the experience stays with you. “Go for the short pain that spending money always gives,” he said. ‘That pain is soon exchanged for the joy of a beautiful or educational experience’.
Is his train of thought correct, we wondered. In other words: is betting easier because of the experience you expect or get afterwards, does it only hurt in the short term, etc.
Bet for money in gambling we may have to make a division into types of gamblers. There are those who gamble for pleasure, see it as a time commitment. Others do it with the expectation of making money, increasing their stake. That group of gamblers will mainly look at the odds of winning, which is what mathematicians call the expected value.
Over the expected value at the tables we wrote earlier in Online Casino Ground. Its history began with the Dutch inventor Christiaan Huygens. In 1657 he devised a method to calculate the probability of certain results from dice. In fact, that was the beginning of establishing the expected value, the probability of winning.
As we saw earlier, that probability differs per game and the margin for the bank or dealer plays an important role in this. However, thinking of the gambler with his rule, we are not necessarily talking about the mathematical probability of winning. It is about the experience of profit opportunity.
After all, every gambler can calculate the winning probability of the game he is playing. But after that, the individual gambler must determine whether or not to spend his money. He is going to put in money and have to weigh his risks. Those risks can go beyond the stake for the gambling game.
Groningen-born mathematician Daniel Bernoulli already understood this. He once said ‘it’s only fools who take risks on the basis of objective profit expectations, without taking the subjective consequences into account’. Instead of subjective consequences, you could also read: the need or desire of the individual person to win.
This individual wish is also referred to as utility. An example that 18th-century contemporaries used after Bernoulli’s statement resembles the television’s Million Hunt. Suppose you see two suitcases. The first case contains 5,000 euros and the second case contains 10,000 euros or nothing. In both cases the expected value is 5,000 euros; after all, the chance of winning is 50% with the second suitcase.
When several people are asked to choose a suitcase, most will pack the first. After all, that gives you at least 5,000 euros. With the second suitcase there is a chance that you will receive 10,000 euros, but you have the same chance of not receiving anything. Seen from the point of view of the usefulness, the subjective expectation, most people find that security of 5,000 euros more pleasant than the risk of an empty suitcase.
Bernoulli and the many mathematicians who came after him found that when making rational decisions in uncertain circumstances, people prefer to avoid risk. But to what extent depends on the personal circumstance. Bernoulli said about this: “the usefulness of an increase in wealth is inversely proportional to the possession one already has.”
In other words, (Multi) millionaires and other wealthy people will experience less benefit from a small increase in their wealth than someone with much less wealth. You might wonder whether the rule (‘You bet money is made for experiences’) of the aforementioned gambler is related to his possession.
At OnlineCasinoGround we prefer to speak of a winning opportunity. After all, this can be determined exactly with almost all gambling games . With a coin the chance of winning on the head is 50%, with a die the chance of winning is 1/6 and with European roulette , the chance of winning is 48.6% when betting on red, due to the bank margin.
Value is a much more flexible concept and also less concrete. You can say something tangible about an amount of money (it is 10 euros), although the value of money is already relative. A ticket of 50 euros punctures one person’s monthly expenses. While another person laughs about it, calculates his probability of getting caught, reviews all previous speeding offenses where he was not caught, and throttle again.
However, experiences are hardly concrete. We do not give an objectively measurable rating to a good meeting, an interesting course or a party afterwards. It is rare that we tell a friend or colleague ‘that party was worth an 8’. We say ‘that party was a waste of my time’ or ‘I learned a lot from that course’.
What about the aforementioned gambler and his rule of life? He will, sometimes consciously and sometimes unconsciously, determine values when betting the money. So subjective expectations. In doing so, he may consider the amount in relation to his assets, fixed costs, liquidity and the like.
And give an expectation value to the experience on which he will spend the money. Finally, he will bet the money on the basis of the ratio between these two quantities: the amount to be bet and the subjective expected value of the experience.
In fact, he is just a gambler, especially in situations outside the casino (after all, there you have a computable chance of winning). On the one hand, he has the amount to bet. On the other, the expected value of the experience. If that value is higher than the money to be bet, he will gain an advantage. But the experience can also be disappointing, less than expected.
With experience you can fill in anything in this case. It could be a course, a pop concert, a book, a trip, an encounter and much more. The disadvantage or advantage (it depends on how you look at it) of the subjective expectation value is that you can rethink it afterwards. There are always things to find with which you can convince yourself afterwards that an experience was (after all) valuable.
Subjective versus concrete
As a real gambler you don’t have that option. Of course after a game of (video) poker you can say that the atmosphere in the casino was so nice and that you got a free drink. Or that the new strategy you used with the online slot machine almost brought you a profit. But you also know that you threw in 100 euros and ended up losing 10 euros. Of course you quickly forget that lost amount, the aforementioned gambler is right. Because with roulette, poker or a slot machine, a new chance, a new experience awaits .