What makes a bet possible? Of course, I suspect it is almost human nature to want to gamble. But that desire is founded on probabilities.
You consider an upcoming event, you estimate the probability of it turning out a certain way, and you choose to place a bet (or not) based on that estimate. There are fellows called bookies who will take your bet. Based on their own estimate of what’s going to happen, they will give you what’s called “odds” on the event.
For example: Imagine two cricket captains about to toss a coin. Both of them, and all of us, know the probability of it landing heads is 1/2. If you find a bookie willing to take a bet on this, it’s likely he’ll give you odds of 1:1; meaning, for every rupee you bet, you’ll get a rupee back if the coin does in fact land heads. A pretty stupid bet to make, you’ll agree. Because if you keep betting, you’ll lose your rupee half the time—when the coin lands tails. And when it lands heads, you simply get your rupee back.
But consider tossing a dice instead. The probability of a “1” is 1/6, and that opens up more apparently interesting betting possibilities. A bookie will likely offer odds of 5:1 on a “1”; that is, for every rupee you bet, you’ll get back five if the dice shows “1”. (If it shows anything else, you lose your rupee.) Sounds exciting, this chance to quintuple (wow!) your money? Would you take these odds and place a bet like this? Read More