Risky Business with Nate Silver and Maria Konnikova How to Win Bets and Influence Elections
Oct 3, 2024
Caroline Ellison's sentencing sparks a deep dive into her role in the FTX scandal—victim or villain? The hosts explore the psychology of risk and accountability amid chaotic finance. With elections on the horizon, they reveal unconventional ways to influence outcomes beyond just monetary donations. Humorously chaotic state names contrast the serious dissection of polling data and campaign strategies. Plus, celebrity endorsements and their impact are analyzed, alongside the legacies of gamblers lost this week.
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Episode notes
Ellison's Testimony
- Caroline Ellison's testimony was key in the FTX fraud case against Sam Bankman-Fried (SBF).
- Her testimony revealed SBF's awareness of the risks and his disregard for potential ruin.
SBF's Risky Strategy
- SBF admitted to knowingly taking risks with customer funds, justifying it with positive expected value (EV).
- He disregarded traditional risk management like the Kelly Criterion, aiming for maximum EV even with high risk of ruin.
Kelly Criterion and Risk Management
- Use the Kelly Criterion to manage risk in gambling, but consider betting less than the full Kelly amount.
- Overestimating your edge and betting too much can lead to ruin, even with a positive EV.