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The Gambler’s Ruin (wonkish)

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The Gambler’s Ruin (wonkish)  [embedded content] [In case you’re curious what happens if you start out with but we change the probabilities — from 0.50, 0.50 into e. g. 0.49, 0.51 — you can check this out easily with e.g. Gretl:matrix B = {1,0,0,0; 0.51,0,0.49,0;0,0.51,0,0.49;0,0,0,1} matrix v25 = {0,1,0,0} matrix X = v25*B^50 X which gives X = 0.68 0.00 0.00 0.32] Advertisements

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The Gambler’s Ruin (wonkish)

 

[In case you’re curious what happens if you start out with $25 but we change the probabilities — from 0.50, 0.50 into e. g. 0.49, 0.51 — you can check this out easily with e.g. Gretl:
matrix B = {1,0,0,0; 0.51,0,0.49,0;0,0.51,0,0.49;0,0,0,1}
matrix v25 = {0,1,0,0}
matrix X = v25*B^50
X

which gives X = 0.68 0.00 0.00 0.32]

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Lars Pålsson Syll
Professor at Malmö University. Primary research interest - the philosophy, history and methodology of economics.

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