Would You Take This Bet?

How much would it take for you to risk $10?

Psychological literature shows that we are more sensitive to small losses and than small gains, with most people valuing a loss around 1.5-2.5 times as much as a gain. This means that we often turn down reasonable opportunities for fear of the loss. However over the course of our lives we will be exposed to many risks and opportunities and this invariably means that taking every small reasonable bet will leave us better off than saying no to all of them.

NOTE: The video is not saying to accept every bet, only those with reasonable odds (preferably in your favour), and those which if you lose would not cause significant financial or other damage. In those cases it is wise to be loss averse!

Filmed by Adrian Tan

[veritasium]

For those who are wondering, I convinced my interviewees that the bet was not a scam: they could inspect the coin, flip it themselves, use their own coin etc. I explained that the experiment was intended to explore their approach to risk. It was fear of losing $10, not distrust, that led them to decline the bet.

[StefandeJong]

If a stranger would offer me this bet, I would immediately assume it's probably a scam. Am I the only one?

[JCKnwledge]

A little extra math for anyone interested.

The long term expected value was hinted on in the video by saying that over 100 bets, you expect to win $500, with a 1/2300 chance of losing money. To explain this better you have to understand the relationship between expected value and variance (or standard deviations).

In his 10 vs 20 bets, the player's expected value is +$5 per bet. The standard deviation of each bet is $15, that is to say the player's expectation is $5 +/- $15.

Now, in the long term, expectations are linearly proportional whereas the standard deviations are proportional to the square root of the number of trials.

So for 100 bets, the player's expectation is +100*$5 (+$500). The standard deviation is sqrt(100)*$15, or $150.

One standard deviation away from the mean encompasses roughly 2/3 of all possible outcomes. Therefore the player after 100 bets, has a 2/3 chance of being up between $350 and $650.

Apply that math even farther, say 1, 000, 000 bets.
Expectation = $5, 000, 000
Standard Deviation = sqrt(1, 000, 000)*$15 = $15, 000.

As the sample size grows, the standard deviation becomes a smaller and smaller proportion of the expected value.

This is the math that card counters, casinos, and even stock brokers rely on to make money.

[darthskixx]

As a former poker player I saw the 12 bucks for 10 bucks bet as an absolute win, and repeating it multiple times is just heaven then

[H.E_I.S_R.I.S.E.N]

Just run away if you lose, giving you a 100% chance of not losing 10 dollars.

[Mewws]

"i need half a million views"

*4.2 Million views later*

[Faizaan]

i'd say let me flip the coin... then just run of with it. INSTANT PROFIT

[laibabbasi]

I was shocked to see that no one took the bet easily.. because my father played this game with me various times and in that i was ready to lose my money(although i don't have much money).. but he wanted us to learn to take small risks.. from there I learned not to think about small losses much and it'd helped me in taking some decisions quite easily..and plus i feel more confident sometimes iykyk;)

[ThunderTurtle]

Nobody wants to make a bet on a coin toss from a physicist.

[Fungamerplays]

imagine being the guy who took the bet and won $10 and then you see the video and realise someone else got $20 out of it just because they were more sceptical

[Nightenstaff]

My very first thought when you offered 12 versus 10 was, "Only if we can flip it 100 times". This showed me I should hold out for the 2:1 bets.

[AbhiandNiyu]

“This video will only make money if half a million people see it” - Gets 7 million views and counting. I guess in this case, everyone is a winner ❤

[tasmanmillen]

I wouldn't accept the $12 bet...
But only to get him to increase the odds

[hokeypokeyy]

People in this video: "nah i dont like risk"


Me at the casino " betting 10x the money and half the odds in this video"

[richardkan]

A guy goes up to the bar owner with a wager "I'll bet you £100 that I can piss into a beer glass you hold in front of you from 3 feet way" barman grinned from ear to ear and agreed. The guy pissed all over the barman, not a drop went into the glass. "Guess I missed. Here's your £100." He then walked outside and collected a £500 bet he'd won from his mates.

[jamesbarber]

I am a paralegal and I do criminal law. We have clients with cases that are easily winnable but they opt for the sure conviction with a plea bargain rather than taking the risk and getting an acquittal. I have never been able to understand the mentality, until now.

[dhananjaymanikandan]

"Only gonna make me money if like half a million people watch it"
sees the "5, 180, 815 views" count*
huh, he made profit I guess

[reynolds]

These people need to take a stats class. You have to be insane not to take a 2:1 bet especially when done 100 times

[cva]

When he added $2 to the original bet, mathematically that made sense to me. I would have taken it. Then he added up to $10 later? I was the sucker.

[T_S_x_x]

its been 9 years and i still love your old vids as much as the new ones!
you are like a role model for me and i love evrything you do pls never stop :D