Certain Loss... or Take a Risk to Get Back to Even?

Your circumstances have led you to a decision point: Take a $1,000 loss, or risk an additional $1,500 on a single 50/50 shot at winning $1,000 to get back to even. In this scenario, you must choose one of these options.

Which do you choose, and why?


The reason I ask is that I came across an article that stated a majority of the general public would answer a certain way, and I wanted to check the validity of the statement.

clearly the majority of americans don't gamble and would take the loss without trying to recoup. But asking this question in a gambling forum may offer a skewed opinion.

Quote: Ayecarumba

Your circumstances have led you to a decision point: Take a $1,000 loss, or risk an additional $1,500 on a single 50/50 shot at winning $1,000 to get back to even. In this scenario, you must choose one of these options.

Which do you choose, and why?


The reason I ask is that I came across an article that stated a majority of the general public would answer a certain way, and I wanted to check the validity of the statement.

Making sure I understand the parameters of the question. Your options are:
A) Accept a $1000 loss (as in, you have lost $1000 and you can walk away).
B) Risk $1500 on a 50-50 shot at winning $1000. If you win, you are back to even. If you lose, you are now a net -$2500

If that is the case, then the EV of (A) is $0 (no decision, you stay at -$1000)

The EV of (B) is .5*1000 + .5*-1500 = -250, so a net loss of -$250 on the decision, leaving you at -$1250.

I would take option (A)

Take the loss or chase your losses?

deleted

Quote: Ibeatyouraces

Take the loss.

you are ruining my this is a gambling forum with a bunch of gamblers in it theory.

(A) because risking $1500 to win $1000 on a coin flip is terrible odds.

Quote: rainman

you are ruining my this is a gambling forum with a bunch of gamblers in it theory.

Advantage gamblers.

I would also take the loss. The expected return is -$250, or 16.6% of the bet. That'd be like a machine with only a 83.4% ER, no thanks.

Risk $1500 to win $1000 on a 50/50 shot?

No. Never. Don't think anyone here would choose otherwise.

16.67% house edge? Really?
I bet, the majority of the (American) general public answered that they wanted to go for it.

Quote: Wupper

Risk $1500 to win $1000 on a 50/50 shot?

No. Never. Don't think anyone here would choose otherwise.

edit misread sry.

Thank you for the responses. For those who have responded, more information about the article that prompted the question is found here:

WOW! I never would have guessed.

This has more to do with bad instant math and wording than loss-chasing. When I read the question, it read like "would you rather stop-loss or take a good shot at recovering?" Then I read the numbers.

How about this scenario for you craps players: Would you lay the four or ten for $2000 ($50 vig up-front) to win $1000?

For those that may not be familiar with the bet, you would have a 2-1 advantage, thus you get paid only half, but lose the $50 vig.

Reason I ask, is we had this guy playing late one night, only one on the table. Usually he's a nickel player, $22 inside, $1 on all the hardways, $5 line bet with little to no odds (we allow 10x). Well his bankroll was slowly disappearing, but had a rough few minutes of point-sevens, so he switched to the don'ts. First he had a point of four, layed max odds, hit the four, then layed the four again for the come-out, and established a new four. Took max odds on his don't bet, rolled a ton of numbers, then hit the four again.

I can't remember how many fours he hit and lost on. He might not have layed it for the comeout, but I think he lost at least three times. It could've easily been the best roll of the entire day, and he was on the wrong side of it. The only money he had was against the four. He lost more than $2K. The strangest part was his reaction. This was significant money to him, but he was stone-faced. I think he might've been on medication though.

Quote: Ayecarumba

The article did not factor in the entertainment value of the risk taking process

I'm only entertained when I win. Throwing money at a
big loss is not entertaining.