Bales Goes Deep: Donald Trump and the Qualities of a GPP Player
Earlier this year, I made a bet with a friend that Donald Trump would become the next president of our fine country. This is a fairly wealthy buddy, so he was fine giving me 150-to-1 odds on a $500 bet, i.e. I will owe him $500 if Trump loses, but I’ll be $75k richer if Trump wins the election.
I don’t think Donald Trump would be a good president. Do I want him to win the election? Um, yeah, now I do. I will sell out for $75,000, sure.
However, I never thought Trump would actually win the election, nor do I even think that now. I just thought he was a much better bet than 150-to-1. I believed people were underestimating how “antifragile” he really is; whereas other candidates can be dramatically harmed by a single piece of negative information, pretty much everything said about Trump, good or bad, helps him. Oh, Trump is a freaking lunatic? Yeah, we already knew that.
Trump is currently right around 6-to-1 to win the election. I think he’s probably closer to 10-to-1 in reality, which is more or less where I thought he was when I took the bet. So I believe there’s roughly a 10 percent chance of Trump becoming president, whereas the break-even point for the bet I made was just 0.67 percent. If Trump’s probability of becoming president is indeed around 1-in-10, I would make a ton of money if we could play out this bet thousands of times. Maybe we can in parallel universes, who knows?
But here’s the thing: we can’t play out the bet more than once in this universe. So in all likelihood, I’m going to lose $500. My expected value might be through the roof, but the most likely outcome is to lose money.
I think this is one of the problems with viewing decisions purely in terms of EV; yes, EV matters—and it matters a lot—but there needs to be some sort of adjusting for the probability of things actually happening. If I had only $500 to my name and made this bet thinking Trump was 75-to-1, would that have been smart? EV says yes, but in reality, I’d argue no because I’d go broke over 98 percent of the time.