January 22nd, 2014 at 3:03:05 PM
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An article in the Daily News says Warren Buffet is offer one billion dollars to anyone who can correctly predict all 63 games in the 2014 March Madness bracket. It claims that the probability of winning is 1 in 4,294,967,296. In case that number looks familiar (JB) it equals 2^32.

That isn't what I get. Let's assume one were to pick the higher ranked seed in every game. The following table shows the probability of winning each game, based on historical experience.

With the last three games all 1- vs. 1-seed I'm assuming a 50% chance of getting each one right.

That said, if you take the product of everything in the "Prob. All Wins" column the answer is 1 in 46,940,073,802. That looks pretty far off from the 1 in 4,294,967,296 quoted in the Daily News. If all 63 games had the same chance of being a winner, then my figure would suggest a probability of success of 67.7% per game, and 70.3% for the Daily News.

Does anyone see a flaw in my math? How about a logical argument for the 1 in 2^32 used by the Daily News? Granted that the higher ranked seed (lower number) is not always the favorite, but that can't be the only reason for this disparity. Thoughts?

That isn't what I get. Let's assume one were to pick the higher ranked seed in every game. The following table shows the probability of winning each game, based on historical experience.

Game | Count | Wins | Prob. Win | Games | Prob. All Wins |
---|---|---|---|---|---|

1 vs 16 | 116 | 116 | 1.000000 | 4 | 1.000000 |

8 vs 9 | 116 | 58 | 0.500000 | 4 | 0.062500 |

5 vs 12 | 116 | 75 | 0.646552 | 4 | 0.174748 |

4 vs 13 | 116 | 91 | 0.784483 | 4 | 0.378733 |

6 vs 11 | 116 | 78 | 0.672414 | 4 | 0.204431 |

3 vs 14 | 116 | 99 | 0.853448 | 4 | 0.530529 |

7 vs 10 | 116 | 70 | 0.603448 | 4 | 0.132605 |

2 vs 15 | 116 | 108 | 0.931034 | 4 | 0.751386 |

1 vs 8 | 60 | 49 | 0.816667 | 4 | 0.444815 |

4 vs 5 | 62 | 34 | 0.548387 | 4 | 0.090438 |

3 vs 6 | 64 | 36 | 0.562500 | 4 | 0.100113 |

2 vs 7 | 66 | 50 | 0.757576 | 4 | 0.329385 |

1 vs 4 | 52 | 36 | 0.692308 | 4 | 0.229719 |

2 vs 3 | 48 | 29 | 0.604167 | 4 | 0.133238 |

1 vs 2 | 56 | 31 | 0.553571 | 4 | 0.093906 |

1 vs 1 | 0.500000 | 3 | 0.125000 |

With the last three games all 1- vs. 1-seed I'm assuming a 50% chance of getting each one right.

That said, if you take the product of everything in the "Prob. All Wins" column the answer is 1 in 46,940,073,802. That looks pretty far off from the 1 in 4,294,967,296 quoted in the Daily News. If all 63 games had the same chance of being a winner, then my figure would suggest a probability of success of 67.7% per game, and 70.3% for the Daily News.

Does anyone see a flaw in my math? How about a logical argument for the 1 in 2^32 used by the Daily News? Granted that the higher ranked seed (lower number) is not always the favorite, but that can't be the only reason for this disparity. Thoughts?

It's not whether you win or lose; it's whether or not you had a good bet.

January 22nd, 2014 at 3:24:52 PM
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I assume he bought insurance for this. How much do you think he is paying for the insurance? It has to be astronomical.

Expect the worst and you will never be disappointed.
I AM NOT PART OF GWAE RADIO SHOW

January 22nd, 2014 at 3:28:51 PM
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Quote:GWAEI assume he bought insurance for this. How much do you think he is paying for the insurance? It has to be astronomical.

If anyone can scrape up a billion dollars it is Warren Buffet.

It's not whether you win or lose; it's whether or not you had a good bet.

January 22nd, 2014 at 3:31:05 PM
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Buffet sells insurance, he doesn't buy it :)

If he is making this offer from his personal stash, he would be crazy to insure it.

If it's one of his companies (wasn't Quicken Loans involved somehow?) that might be different.

If he is making this offer from his personal stash, he would be crazy to insure it.

If it's one of his companies (wasn't Quicken Loans involved somehow?) that might be different.

January 22nd, 2014 at 3:39:14 PM
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Quote:GWAEI assume he bought insurance for this. How much do you think he is paying for the insurance? It has to be astronomical.

Buffet said that one of his own insurance companies is writing the policy so it is somewhat self insured. I guess other holders of Berkshire Hathaway are sharing the risk.

"Truth is ever to be found in the simplicity, and not in the multiplicity and confusion of things."
- Isaac Newton

January 22nd, 2014 at 3:52:42 PM
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I though a company is offering this, and Buffet is underwrting it.

Like espn or whatever company is promoting it.....and they pay buffet x amount to insure it for 1 billion.

I mean what does buffet himself care if someone can pick the right brackets. He is a businessman. What does he make from this deal?

I guess if I understand this right...he makes the cost of the insurance policy. He limits it to 10 million entries.

am i understanding this wrong?

Like espn or whatever company is promoting it.....and they pay buffet x amount to insure it for 1 billion.

I mean what does buffet himself care if someone can pick the right brackets. He is a businessman. What does he make from this deal?

I guess if I understand this right...he makes the cost of the insurance policy. He limits it to 10 million entries.

am i understanding this wrong?

January 22nd, 2014 at 4:03:42 PM
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Quote:LarrySI though a company is offering this, and Buffet is underwrting it.

Like espn or whatever company is promoting it.....and they pay buffet x amount to insure it for 1 billion.

I mean what does buffet himself care if someone can pick the right brackets. He is a businessman. What does he make from this deal?

I guess if I understand this right...he makes the cost of the insurance policy. He limits it to 10 million entries.

am i understanding this wrong?

It sounds like quicken loans is getting a lot of advertising from this.

January 22nd, 2014 at 4:13:59 PM
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What an odd proposition from The Orifice of Omaha.

Each day is better than the next

January 22nd, 2014 at 4:14:09 PM
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Isn't there 68 teams and 67 games now in the tournament?

Living longer does not always infer +EV

January 22nd, 2014 at 4:21:33 PM
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lol