William Poundstone
William Poundstone is an American author, columnist, and skeptic.
In American culture the coin toss is the paradigm of the random event. A coin toss decides who kicks off the Super Bowl. Looked at another way, a coin toss is not random at all. It is physics.
Your second ducat, like your second million, is never quite as sweet.
Expectation is a statistical fiction, like having 2.5 children.
"Average" isn't so hot at the race track given those steep track takes. "Average" is pretty decent for stocks, something like 6 percent above the inflation rate. For a buy-and -hold investor, commissions and taxes are small.
The problem with winning at blackjack and sports betting is that sooner or later a big guy in a suit tells you to leave.
The engine driving the Kelly system is the "law of large numbers." In a 1713 treatise on probability, Swiss mathematician Jakob Bernoulli propounded a law that has been misunderstood by gamblers (and investors) ever since.
Shannon's most radical insight was that meaning was irrelevant.
A bit is worth 10,000 basis points.
For reasons mathematical, psychological, and sociological, it is a good idea to use a money management system that is relatively forgiving of estimation errors.
From Adam Smith through John Maynard Keynes, economics had been mostly talk. At Harvard economics was talk. At MIT, Samuelson made it math.
To hedge the bets he made every working day, Meriwether kept a set of rosary beads in his briefcase.
Far from preventing gambler's ruin, martingale accelerates it.
Carl Friedrich Gauss, often rated the greatest mathematician of all time, played the market. On a salary of 1,000 thalers a year, Euler left an estate of 170,587 thalers in cash and securities. Nothing is known of Gauss's investment methods.
Use "entropy" and you can never lose a debate, von Neumann told Shannon - because no one really knows what "entropy" is.
By the mid-1930s, Moe Annenburg was AT&T's fifth largest customer.
Paradox is thus a much deeper and universal concept than the ancients would have dreamed. Rather than an oddity, it is a mainstay of the philosophy of science.
In real conversations, we are always trying to outguess each other.
At a bare minimum, understanding entails being able to detect an internal contradiction: a paradox.
The more improbable the message, the less "compressible" it is, and the more bandwidth it requires. This is Shannon's point: the essence is its improbability.
Bernoulli's real contribution was to coin a word. The word has been translated into English as "utility". It describes this subjective value people place on money.