Posted on 04/09/2009 11:03:51 AM PDT by fiscon1
Game theory tells us that a risk neutral gambler would pay $50 dollars for a coin flip that paid $0 for Heads and $100 for Tails. Game theorists would call $50 the value of the bet.
Suppose someone is willing to fund your gambling problem, and lend you $80 at zero interest. Better still, if you lose the bet you dont have to pay him back. Under that scenario, the same gambler would pay $90 for the bet, giving him an even chance of winning or losing $10.
(Excerpt) Read more at realclearmarkets.com ...
bfltr
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