CMPS240, Spring 2013, Section 01: Gambling Formulas

1. The fundamental formula of gambling tells how many trials must be made for an event with

probability P to occur at least once with certainty C:   log(1-C)/log(1-P)

See http://saliu.com/formula.htm

 

2. The Kelly Criterion determines the optimal long run bet size given the odds and expected returns.

See http://en.wikipedia.org/wiki/Kelly_criterion

 

 Check out this St. Peterburgh Paradox Video (especially the right hand column)!

http://youtu.be/QAizn9gqhO8