Post
Topic
Board Securities
Re: S.DICE - SatoshiDICE 100% Dividend-Paying Asset on MPEx
by
kgo
on 28/03/2013, 16:47:03 UTC

This is a misunderstanding of the rules of probability. For systems like this, past results have no bearing on future results. The expected profits for April are not related to what happens in March. (With the caveat here that since this is a business things are a bit different. If we actually get a loss for the month, then that would be carried forward into April, but if it just breaks even then April is unaffected.)

To get a better grasp of this, lets assume that when you have a child you have an equal probability of having a boy or a girl. I already have two girls, what is the probability that my next child will be a boy?

Answer: The probability of having a boy is 50%, the same as it was for the first child.

Of course statistically this is known as the Gambler's Fallacy.  Yes we could stay above expected profit forever since each win/loss is independent.  We could also stay below the expected profit for an infinite amount of time.

As a practical matter expecting a large amount of independent die roles to ultimately be closer to the expected probabilistic outcome rather than further is how all casinos generate money and long term why you can't beat the house.  In the long run profit will return to the expected value based on expected probabilities.

Given that and the relatively low volume, I think it's more likely that we'll draw closer to the expected profit rather than further.