Ok. I had a bit of an epiphany - the argument has been over what diff setting is correct this whole time, but now I understand we really should have been arguing over reward system.
Everything I am saying is accurate for a proportional reward system. If we aren't using a proportional reward system, woah, that probably should have been mentioned weeks ago.
What a lot of the arguments are saying would be true if there was one long block with no block changes.
That's the epiphany I had - we should be arguing to go to PPLNS.
The effect I am describing is present when each block has shares associated with it and when the block is found the reward is shared among those blocks. Everything resets for the new block. Proportional reward.
If we've been using something else, than no wonder we are all disagreeing, we are basically speaking different languages.
But PPLNS would eliminate the bias almost completely. The block change would then have no effect on the payout.
I will concede that in a PPLNS system, yes, all the diff does is introduce variance. I could modify my script in 5 minutes to simulate PPLNS and I bet the numbers would look good.
Lets change this conversation. H20, can you verify what reward system you are using now? It's not explicitly mentioned in your FAQ or announcement statement. Now I realize, unless everyone is on the same page on this we are going to spin our wheels forever.
Second, instead of arguing about diff - which would alleviate the problem I am describing but not eliminate it, can we talk about PPLNS or something similar?
Nowhere in my previous post am I assuming PPLNS. I am actually assuming straight PPS. Please read it and try to understand it. Or at least look at the python script.