Would You Take This Bet?

I want you to consider this bet. Here’s
ten dollars. This could be yours if I flip this coin in the air, you guys call it in
the air. If you’re right I give you the ten dollars. If you’re wrong you give me
ten dollars. I saw that coming. That’s not a good bet for me. I guess in principle I don’t
agree with the idea of betting. Okay, okay. But what if we just use this as like an allegory
for life. You know, it’s not really about money and betting on a coin, it’s more about
our approach to risk. Okay, and my approach to risk is obviously a lot less than yours.
You wouldn’t do this bet? No, no. No, I don’t have ten bucks. My gut says don’t
bet. Why is that? Because at the moment I have ten dollars and later I might not. So
people are passing up the opportunity to win ten dollars of my money. But it kind of makes
sense because they have to risk ten dollars of their money and it’s a 50/50 chance,
so really the bet has zero value. What if I sweeten the deal? What if I put up twelve
dollars to your ten? You only stand to lose ten. You stand to gain twelve. How’s that
sound? I wouldn’t. I still wouldn’t bet. I feel like I’m better off just leaving
it as it is. I’ll offer you 15 dollars. You only have to put up 10. I’m putting
up 15. No. I’m offering you an extra five dollars. Why not? I’m not giving my 10 dollars
away. What about 20? That’s as high as I’m going today. Twenty dollars that is the top.
It’s two to one. I just don’t like taking that much risk. You don’t like risking ten
bucks? Sure. I’m valuing my 10 dollars, I am. But why don’t you value my 20 dollars
which you’ve got a 50 percent chance of right here if you accept the bet. I don’t know.
I can’t tell you. It’s not like a, I don’t know what the logical reason is for why I
want that. I don’t know. I can’t be, I just feel it’s not right. Now this does’t
make sense. I’ve offered people up to 20 dollars and they’re still refusing to take
the bet. Well the bet is objectively in their favor. I mean a 50% of winning 20 plus a 50%
chance of losing 10 still gives the bet an overall value of 5 dollars. Why is it that
you won’t go for this bet? I don’t know. Because I don’t want to lose 10 dollars
just because of that easily. I know but you could win twenty dollars. Think about the
gain. Well, I don’t know. I’m thinking more about what I lose than what I win. I
think. I think that’s exactly the point. Because we feel losses more than we feel gains.
There’s an asymmetry in the way people perceive gains and losses. Losses are felt much more
intensely. In fact psychology most people weight a loss around twice as heavily as a
gain. But this varies from person to person. What if I go to 30 dollars? I said, even if
you had 50 I would still feel the same way. Fifty dollars to 10 dollars that would be
a reasonable. That’s when you would say yes? Possibly, yes. You’re gonna have to
give me like a hundred. But I lose ten. This is known as loss aversion. To avoid risking
a loss, people will pass up even very favorable bets. But is there a way to overcome our oversensitivity
to losses? Let me ask you this. What if I offered to do this ten times in a row? Same
deal, 20 dollars for your ten, flipping this coin? But then I would be losing 10 dollars
each time wouldn’t I? You might be, you’d be risking 10 dollars each time, but you know
that this is 50/50 and you know that I’m giving you ten chances. Is that a better deal,
to do it repeatedly? I don’t think so. What about a hundred times? I don’t think so.
It doesn’t get better? No. If we played enough and I had enough of you know of a stake
of 10 dollars then eventually yes I would make more money yes. So why does repeating
the same bet change it? I don’t think there’s a rational thought behind it, it’s just
a feeling that one gets when presented with the opportunity. I don’t know. I think there
is a rational reason behind it. Is it? Yeah. Because the coin is going to be 50/50. You
don’t know on one toss, you’re only going to get one outcome. But in a hundred tosses,
you know that it’s going to be somewhere between like 45 and 55 times it’s going
to go your way, 45 to 55 times it’s going to go my way. Right? The point is, every time
it goes your way, you win twice as much as you lose when it goes my way. So the point
is, doing it a hundred times you’re basically guaranteed to win money. More chances. No
no, it’s not more chances of winning, it is you are guaranteed to win money. In fact,
the expected value of a hundred of these bets is a win of 500 dollars. And there’s only
a one in 2300 chance of losing any money at all. So even if you weight losses twice as
much as gains, a hundred bets is indisputably favorable. So here’s the thing, how do you
accept a hundred of these bets if you won’t first accept one of those bets? This experiment
is not about gambling. It’s not to encourage you to go to the casino where the odds are
definitely stacked against you. Instead, it is a metaphor for all the little risks and
opportunities that come our way in our lives. I mean if you view each one as an independent
event, you will often say no to even very good bets because you’re afraid of the loss.
So if instead you can see each little bet as one of a series of bets, then you realize
that if you take that bet every time you may win and you may lose, but overall on the aggregate,
you will come out ahead. Heads. Heads it is. He’s just won himself 12 bucks. Tails. The
ten bucks is your sir. Heads. Thank you very much. The man has won 20 bucks. See, it pays
to take the risk. Yay! Yes! This is unbelievable. My stroke of luck today has been terrible.
Every has won off me so far. Who’s funding you? I’m funding myself. That’s honestly
my money. Really? Yeah. This video is in fact a bit of a risk for me. Because I’m giving
out all this money and it’s only going to make money on YouTube if like half a million
people see it. So if you like this video, then you should share it with your friends
so that this actually turns out to be a positive bet for me. Okay I’ll do that. Yeah. Share
it with your friends. It’s Veritasium. That’s the name of the website. Veritasium. So would
you take this one-off bet? Let me know in the comments below and tell me know how much
money I would have to put up for you to risk your ten dollars. Now this video was inspired
by the book Thinking Fast and Slow by Daniel Kahneman which I’ve recommended before because
it’s awesome and it also inspired me to make these cool videos so check them out if
you haven’t already. But since I’ve recommended this book before I’m going to recommend
something different today. My friend Phil Plait’s book Bad Astronomy which is all
about misconceptions and misuses of astronomy from astrology through to the moon landing
hoaxes. It is an awesome book so you should definitely check it out and in fact you can
download it for free by going to audible.com/Veritasium. Or you can pick any other book of your choosing
for a one month free trial. Audible is a great audiobook website with over 150,000 titles
in all areas of literature including fiction, nonfiction and periodicals. So I really want
to thank audible for supporting me and I want to thank you for watching.

65 thoughts on “Would You Take This Bet?

  1. i would take it if i get to toss it 10 times and the price that you will give me is 2 times then the probability to me to get 1.5 times are 50 percent and 0 percent for 1.0 times.

  2. Čiaužiau nuo kalno žiemą ir trenkiausi nugarą į mažą duobę, dabar visą gyvenimą negalėsiu sportuoti, manau pats supranti kaip skaudėjo.

  3. this people are so dumb. we go 10 times i give you 20 you give me 10. ok? no IT MAKES NO SENSE SHE WOULD GET BY CHANCES $50

  4. if you have 50 dollars in your wallett then you should only take the ten dollar 50/50 chance bet if you can win 12.50 dollars or more.

  5. At 1:56 these 2 dude in orange in the back ground would have for sureeee you are asking to some rich dude or cheap has scared of her shadow girl if theg would do it

  6. even though there is a 50/50 chance doesnt mean that the coin will land on one side 50% of the time, it can land on one side a fair 75 times meaning the chance of losing is drastically higher than is being let on, i may be wrong but thats my speculation

  7. $11 to $10 but we have to do it a minimum of 20 times. At 50/50 odds I'd double my money every 20 times which would be worth the risk of total loss. One time would only be a 10%return but a risk of 100%loss. It's not worth the risk until the return equals the risk.

  8. Interesting for me was I realised my risk aversion went up as the difference became minimal. So if it was $100 of my money for $113 of your money and there was 100 coin tosses, I feel I would probably not take the risk. And even though I know I stand to come out around $12 richer at the worst of it, I just don't feel like risking it just in case the odds this time are not in my favour. And yet many people would call me a risk taker. Go figure.

  9. This all depends on how good a person is at flipping and catching a coin with no variable outcome. If well practiced, it can always be heads or always be tails respectively. The outcome could be directed as you wish. I would not want to bet.

  10. I have a roulette strategy is predicated on winning 2 out of 7 spins picking 5 adjacent/contiguous numbers.
    I would be all over his wager at $12 to $10

  11. Loss aversion exists because resources you can count on are actually more valuable. If I have $10, I can plan to go to starbucks and buy myself some coffee. If I accept a risk of losing the $10 in hopes of gaining $20, then I can't plan anything.
    It may be worth sacrificing the ability to plan in exchange for an expected value of $5, but there's no way it is in exchange for an expected value of $1.

  12. I think that the "fear of losing" is not exactly the reason people are turning down this bet in public…..I think that the idea of "it's too good to be true" and "swindler probability" plays a factor. The more you are offering in THEIR favor, the more they are feeling this negative pressure to NOT take part in it. Mathematically asking in rigor to anonymous people, you will find that the majority will say yes to this bet as a general answer, while following through with the bet might be wavering (but only slightly), because it can be witnessed as a question of choice rather than a question to take action, and the situation can be fixed mentally (so no cheating is allowed).

    Anyone who says "no" to a bet of more than a 10% gain on a single throw, or 0.1% gain on more than 9 throws of a balanced throw game has clearly not thought things through. If you can vary the size of your bet, then 0.05% of your entire life savings should be wagered each round of a 0.1% gain >9 throw game, based on Kelly criterion…..or in the case of 2-to-1, you should be wagering 25% of everything you own every round of a >9 throw game. If the throws are a predetermined count, then the % reduces to zero over the span for the bet amount.

  13. The only reason they don’t bet is that they didn’t get proper math knowledge from their education system. If you take this test to China, you would be bankrupt the first day.

  14. I'd take the 12 bucks bet easily.
    I can't believe those people are all the ones he interviewed….. he just opted to show the ones that were helping the narrative. lol.

  15. I don't know how but when someone is flipping a coin and if can see the coin while it's being flipped i guess the right side more than 80% of the time..pretty handy to win tosses for my side 😉

  16. The reason that people don't trust is that they are suspicious about the true outcome of the coin. Deep down, they feel there's a trick with the coin. What if you ask them THEY flip THEIR OWN coins?!

  17. half a million views to make money, YouTube charges pennies per view to advertisers.

    by the given context youtube is taking $50,000 for every dollar they pay a creator.

    creators are being shafted.

  18. This video is basically a lesson in day trading: your Win/Lose ratio is 50% because of the coin toss and your Reward/Risk Ratio 2:1.

  19. Pretend I have $20. If I lose, I'll have 50% of budget, if I win, I'll have 200% budget.
    Pretend I have $10. If I lose, I'll have 0% of budget, if I win, I'll have 300% of budget.
    Idk why did I write it lol

Leave a Reply

Your email address will not be published. Required fields are marked *