From: kbanaian@bernard.pitzer.claremont.edu (King Banaian)
Subject: Re: Expos Clinch! Wallach to Dodgers
Organization: Harvey Mudd College, Claremont, CA 91711
Date: Sun, 3 Jan 1993 22:47:42 GMT

In article <1993Jan3.215016.2706@ramsey.cs.laurentian.ca> maynard@ramsey.cs.laurentian.ca (Roger Maynard) writes:
>In <kbanaian.137.0@bernard.pitzer.claremont.edu> kbanaian@bernard.pitzer.
claremont.edu (King Banaian) writes:>
>>In article <1993Jan3.193620.27863@ramsey.cs.laurentian.ca> maynard@ramsey.cs.laurentian.ca (Roger Maynard) writes:
>

>Well if the stats measure performance and performance is equal to 
>talent + intangibles and talent is = 97% of performance then any
>prediction based on performance must be 97% accurate - after discounting
>the intangibles.
>
The problem here is proxy error.  An intangible is something inherently 
unmeasurable.  Performance contains parts that are currently measured and 
parts that aren't.  The stats we use today are a proxy for performance.  
Due to efforts by people like Palmer and James, they are loads better than 
the stats we had 20 years ago.  But perfect they are not.  If I had a 
foolproof measure of performance, I might reach toward the 97% (but I 
actually think it's a bit out of reach).  I don't, and anyone representing 
to on r.s.b had better don his asbestos suit.  Your argument should be 
about the size of the proxy error, not the degree of intangibility.

>>>If you really think
>>>that your methods are more accurate than those of the common herd then
>>>why don't you hop on down to Vegas and get rich betting on baseball?  If
>>>you are concerned about sample size - bet on every game.  

>>2.  I must bet $6 to make $5 on even money propositions, so I have to hit 
>>over 55%, not 50%.
>
>Is 55% out of the question?  are you saying that statistical analysis gives
>you no better than 5% more accuracy than a coin toss?
>
I have yet to see baseball betting results -- I think you're right to ask 
for such research -- but the results for football suggest that there are 
profits to be made there.  I'd guess we can do so in baeball too, since the 
data are so much better.

>>3.  Betting is an efficient market:  the statistical realities are already 
>>in the odds.  Your statement:
>
>>>Odds are calculated
>>>according to how bookies predict people will bet - not on the final score.
>
>>... is baloney.  The bookie adjusts the odds so that an even amount of money 
>
>Yes, the bookie adjusts the odds after he receives some action - but his
>original posting is calculated to attract equal interest.  In other words
>the bookie posts his odds according to how he predicts people will bet.
>
I had a student research this once.  What he found was that the movement in 
the line occured on about 40% of the games.  See, if a book gets out of 
balance, he typically lays the bet off on another book.  That costs the book 
money (not the 5%, but more like 1-2%;  this from a professor at UNLV).  So 
he does have an incentive to get the line right -- it increases his profits.

>>>Surely your scientific methods would give you the advantage over those
>>>who bet by gut feelings?  
>
>>Not at all.  The gut bettors are not those who drive the action (were it so, 
>>I could make tons of money betting each week against the Cowboys, who have a 
>>lot of rich fans;  same goes for the Niners).  When I lay a million on the 
>>Jays, the odds drop on them, going up on the Braves, and some other sharpie 
>>bets on them, since they are now a better bet.  (I.e., the price of betting 
>>on them has fallen.)
>
>Sure but the odds that you have bet on haven't changed.  They change only
>for subsequent bettors.

I believe, Roger, you've missed the point.  The people who end up moving the 
line are not the smart ones but the dumb ones.  In any bet I'll take either 
side depending on the odds.  I think the Mariners are right now a 150-1 shot 
to win the Series.  I don't think the M's have a rabbit's chance at 
virginity of winning the Series, but it is better than 150 to 1.  Upon 
request, I will mail you a copy of my $10 bet on the M's.  Likewise, I 
really like the Cards for next year, but the odds are too small.

>
>It seems to me that you are admitting that your methods of prediction are
>less than 5% more accurate than a coin toss...
>
Actually I think we can find advantages of abut 10%.  But I am a very risk-
averse guy (I've got enough problems with the Red Sox!).  My limited cash 
and my risk aversion keep me off those 11pm flights to Vegas.

I'm not picking order of finish.  I am constructing subjective probabilities 
of each team winning, based on all information I consider relevant, and 
comparing it to the odds board.  Those probs that are severely out of line 
are the ones I buy.  The identity of the team has usualy little to do with 
my decision after the probs are calculated.

But my basic point holds:  Vegas is a mildly efficient market;  and it's 
damned hard to make money there no matter what knowledge you bring.  There 
are some areas where cash can be earned (see _The Hidden Game of Football_ 
for a discussion of this), but they are few and far between.

>If that is the case - why do you bother making predictions at all?????
>
a.  It's a lot of fun, and is part of the joys of r.s.b;
b.  I think I'm pissing you off, and I'm enjoying every minute of it;
c.  I can make predictions and not make money, because Vegas is an efficient 
market;
d.  All of the above.