That last post. Disability insurance?! Really? B-O-R-I-N-G.
Let's talk about something more fun. How about gambling and boxing?
The night was August 26, 2017. Floyd Mayweather Jr. and Conor McGregor in "The Money Fight" in "The Biggest Fight in Combat Sports History". Incidentally, I have a personal connection to other events from this night, but we'll get there in the future.
The fight was later estimated to be the most bet boxing match ever. Surely most of the betters were choosing the man who had won 49 straight professional boxing matches over the man who had won none, right? Of course not! Who goes to Vegas to take the 'safe' option?
"We learned the public is more willing to overlook statistics and take a shot with a big payout," Jay Rood, vice president of MGM Resorts race and sports, said. It is estimated that about 94% of the bettors took the 3.75/1 odds for McGregor to beat Mayweather, instead of the -475 odds the other way. After all, who wants to put up $475 to only get back $100?
Given the natural public bias of wanting to see the unexpected occur, professional gamblers, i.e. those that seek to estimate an actual probability and compare to the market probability, were plowing millions of dollars onto Mayweather. And why wouldn't they? After all, the early odds on Mayweather, likely closer to the true probability, were roughly: bet $2,250 to win $100.
Unsurprisingly, the competitor who was actually a boxer won the boxing match, and the professional bettors, along with the Bookmakers, got richer.
Were the thousands of people who bet on McGregor to win upset they each lost their $10? Probably not. Were some professional gamblers likely upset they did't bet more? You bet.
As humans, our intuitions and imaginations often get in the way of making statistically sound financial decisions. The first step is admitting you have a problem.
Let's talk about something more fun. How about gambling and boxing?
The night was August 26, 2017. Floyd Mayweather Jr. and Conor McGregor in "The Money Fight" in "The Biggest Fight in Combat Sports History". Incidentally, I have a personal connection to other events from this night, but we'll get there in the future.
The fight was later estimated to be the most bet boxing match ever. Surely most of the betters were choosing the man who had won 49 straight professional boxing matches over the man who had won none, right? Of course not! Who goes to Vegas to take the 'safe' option?
"We learned the public is more willing to overlook statistics and take a shot with a big payout," Jay Rood, vice president of MGM Resorts race and sports, said. It is estimated that about 94% of the bettors took the 3.75/1 odds for McGregor to beat Mayweather, instead of the -475 odds the other way. After all, who wants to put up $475 to only get back $100?
Given the natural public bias of wanting to see the unexpected occur, professional gamblers, i.e. those that seek to estimate an actual probability and compare to the market probability, were plowing millions of dollars onto Mayweather. And why wouldn't they? After all, the early odds on Mayweather, likely closer to the true probability, were roughly: bet $2,250 to win $100.
Unsurprisingly, the competitor who was actually a boxer won the boxing match, and the professional bettors, along with the Bookmakers, got richer.
Were the thousands of people who bet on McGregor to win upset they each lost their $10? Probably not. Were some professional gamblers likely upset they did't bet more? You bet.
As humans, our intuitions and imaginations often get in the way of making statistically sound financial decisions. The first step is admitting you have a problem.
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