Post
Topic
Board Gambling
Re: DiceBitco.in | BE THE BANK ! | 1% House Edge | 2000+ BTC BANKROLL | INSTANT!
by
nicolaennio
on 14/08/2014, 18:29:50 UTC
The site looks nice guys, but I have a concern related to the max bet size, which now is 1% of the bankroll. If you used the Kelly criterion for computing it, please consider kelly's computation is theoretical and works in the "long" run. However in practice the "long" run may not exist because few "whales" can bet reliably so high.

The problem not considered by Kelly's computation is that under a certain threshold of losses irrational investors may start mistrusting the website and run away with their money in panic. At the same time the lucky whale may not appear again for a long time, possibly slowing the recap of other investors.

That's why it exists the concept of Half Kelly criterion (see http://thehackensack.blogspot.fi/2009/11/half-kelly-bet.html) but if you are willing to code it you can just run some simulations of a whale betting 1% at 49.5% and check by yourselves how many times the bankroll is badly damaged before going up again and figure out the reaction of people in front of that damage.

My suggestion (as a tiny investor) is to cut the max bet to 0.5% or 0.25%.