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#kellycriterion — Public Fediverse posts

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  1. A funny paper from 1979: 'Why We Should Not Make Mean Log of Wealth Big Though Years to Act Are Long' citeseerx.ist.psu.edu/document

    This is about the Kelly Criterion, which is a suggestion for how much you should bet on a risky investment with positive expected value. There was a heated debate about whether this criterion was only useful when your utility was logarithmic in money, or if it had broader applicability. The argument got so bad that Samuelson thought his opponents needed everything explained in words of one syllable!

    Not only is this very patronising, he also screws it up by using two syllable words in a couple of places. But I still think he's right about the Kelly Criterion.

    #Math #Maths #Mathematics #KellyCriterion

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  3. #KellyCriterion

    In probability theory and intertemporal portfolio choice, the Kelly criterion, Kelly strategy, Kelly formula, or Kelly bet is a formula for bet sizing that leads almost surely to higher wealth compared to any other strategy in the long run.