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Offline yoyo

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Players vs Shareholders
« on: April 05, 2014, 08:36:32 PM »

It is my first post here so hello :)
My background is in software engineering so pardon the inaccuracies I may make with regards to economics theory while I catch up.

I have a hard time grasping the incentive models for the charity/lottery ideas proposed.

If I understand correctly the DAC lottery model proposed, everybody owns shares; some shareholders bet their shares during a lottery round; others prefer to keep them.

Let's consider a simple lottery model with a single, assured winner of 99% of all bets, while 1% is redistributed to shareholders.

If you don't play, you are assured of a 1% payback.
If you do play, you may or may not get 99% of all bets. But on the long term your expectation as a player is a 0.99 return.
Why would anyone play rather than hold?

As the saying goes, the house always wins. In the real world you don't really have the choice of being the house. But here the incentives might be different. You are given the opportunity to either be the house or a player. Why would you choose the risky behavior over the sure income?

If you remove the assured payback for non-players and redistribute 100% of bets to winner(s) then why would anyone buy shares in the first place? The incentive cannot simply be the hope of winning the lottery since you'd still need to sell the shares to a buyer at some point.

Thanks for any insight.

Offline toast

Re: Players vs Shareholders
« Reply #1 on: April 05, 2014, 08:42:48 PM »
Your question is just "why do people gamble at -EV games"... idk dude why? Clearly people do it, it's fun or something idk

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Offline yoyo

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Re: Players vs Shareholders
« Reply #2 on: April 05, 2014, 09:20:48 PM »
Except here you have the very concrete possibility of playing it safe?
To me a shareholder is just another player in the game, with different stake/risk.

Offline HackFisher

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Re: Players vs Shareholders
« Reply #3 on: April 05, 2014, 11:09:50 PM »
People do not need to be the players and shareholders at the same time. Some people just want to act as players for fun, being excited about the chance to win large jackpots, some others may just be interested about the ROI of the DAC, want to act as shareholders.

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Offline Empirical1

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Re: Players vs Shareholders
« Reply #4 on: April 06, 2014, 01:00:57 AM »
Yes people play lotteries now knowing they are losing 50%, so a few % in a lottery DAC is nothing.

People are willing to forgo that much EV for the chance to suddenly win a big prize.

Some people want to be shareholders/investors earning a nice return in various businesses and some people want to be gamblers hoping to hit a big pay-day. Some people even do both.

Offline bytemaster

Re: Players vs Shareholders
« Reply #5 on: April 06, 2014, 02:07:18 AM »
Yes people play lotteries now knowing they are losing 50%, so a few % in a lottery DAC is nothing.

People are willing to forgo that much EV for the chance to suddenly win a big prize.

Some people want to be shareholders/investors earning a nice return in various businesses and some people want to be gamblers hoping to hit a big pay-day. Some people even do both.

Be a share holder and use your dividends to play the lottery?
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Offline Empirical1

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Re: Players vs Shareholders
« Reply #6 on: April 06, 2014, 02:32:06 AM »
Yes people play lotteries now knowing they are losing 50%, so a few % in a lottery DAC is nothing.

People are willing to forgo that much EV for the chance to suddenly win a big prize.

Some people want to be shareholders/investors earning a nice return in various businesses and some people want to be gamblers hoping to hit a big pay-day. Some people even do both.

Be a share holder and use your dividends to play the lottery?

 +5% That's a nice freeroll   :)

Offline bytemaster

Re: Players vs Shareholders
« Reply #7 on: April 06, 2014, 02:37:48 AM »
Yes people play lotteries now knowing they are losing 50%, so a few % in a lottery DAC is nothing.

People are willing to forgo that much EV for the chance to suddenly win a big prize.

Some people want to be shareholders/investors earning a nice return in various businesses and some people want to be gamblers hoping to hit a big pay-day. Some people even do both.

Be a share holder and use your dividends to play the lottery?

 +5% That's a nice freeroll   :)

Only if you ignore opportunity costs.
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Offline Empirical1

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Re: Players vs Shareholders
« Reply #8 on: April 06, 2014, 02:52:08 AM »
Yes people play lotteries now knowing they are losing 50%, so a few % in a lottery DAC is nothing.

People are willing to forgo that much EV for the chance to suddenly win a big prize.

Some people want to be shareholders/investors earning a nice return in various businesses and some people want to be gamblers hoping to hit a big pay-day. Some people even do both.

Be a share holder and use your dividends to play the lottery?

 +5% That's a nice freeroll   :)

Only if you ignore opportunity costs.

True

Offline mint chocolate chip

Re: Players vs Shareholders
« Reply #9 on: April 06, 2014, 07:38:56 AM »
Play the lotto, win a jackpot, earn new dividends on winnings. Play more lotto, win another jackpot, earn more dividends. Rinse and repeat. Sounds like a jolly good time.

Offline FreeTrade

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Re: Players vs Shareholders
« Reply #10 on: April 06, 2014, 09:10:37 AM »
Lotto/Keno DAC/currency has some advantages too -

1 potentially better returns (conceivably 99% returned to players),
2 faster (potentially draw every block)
3 you earn money on your investment while not playing

I think a small play on the lottery is a perfect rational action given the excitement it provides. Only when an individual is overspending does it become a 'tax on stupidity'
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Offline Akado

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Re: Players vs Shareholders
« Reply #11 on: June 07, 2014, 08:00:08 PM »
People usually gamble for the thrill, for the excitment they have not knowing if they will win or not. That's what fun about it. On top of that, by gambling here, you're not only having fun, but also stimulating the economy i guess? I mean, usually all the money goes to a single entity ie. casino. here, even if you loose, your money will be distributed by all the shareholders, which will eventually be used and spend here, making the community grow and eventually benefitting yourself. My point is, even if you loose here, you're contributing to a good cause
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Offline CLains

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Re: Players vs Shareholders
« Reply #12 on: June 07, 2014, 08:27:40 PM »
There is like a billion psychological fallacies that enter into gambling, difficulties with delayed gratification, overestimating small probabilities, overestimating impact of winning the big prize, seeing patterns in random processes, ...
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Offline betax

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Re: Players vs Shareholders
« Reply #13 on: June 16, 2014, 12:43:22 PM »
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