I've been thinking about this for a while, but first, a topic that's indirectly related. While discussing my post Poker at South Point: The Normal, my friend, who plays a lot of poker, had some thoughts about a couple of the hands. Regarding hand 1, he said, "I can't believe that nit folded for 30. that's an awful raise - and you're not raising for info, you're raising for value. TPTK is the nuts live, so overpairs are the supernuts." Then he said, "hand 2, you absolutely have to bet middle pair for value on the flop. you have the best hand here an overwhelming majority of the time at 1/2." The thing in common I noticed about the two comments was the use of the term "value".
I know that poker players love talking about EV and I certainly know enough about it, with my Bayesian stats background. Also, as another friend said, "In poker, EV tends to equal EU. It won't always, but on any given hand, it probably does." But in this case, it really was about EU. It's about utility. I'm perfectly happy to sacrifice expected value for other things that mean more to my personal utility. I wasn't out there to play 3000 hands/week and grind out a second living. I was out there to have some fun, play some cards, and maintain a +EV without risking much capital if I could avoid it. Keeping the pot size variance down when the hand was speculative was very important for me. Everybody has their own style that maximizes their playing ability, ie. personal utility.
This topic also comes up in bridge. While discussing bidding with a potential partner, he would frequently retort, "Bob Hamman doesn't bid like that." Bob Hamman also plays Flannery and I believe he is the only world class player that plays standard carding. Two things that most modern experts would classify as technically inferior (and hence not maximizing EV, right?). But when you play as well as Hamman, the things that matter are comfort and reducing randomness. The marginal return on pressing that edge is much smaller than the utility created from avoiding randomness and additional comfort. I've read somewhere that the Italians tend not to preempt at the 3 level for fear of generating random results.
Okay, back to the lottery. I was once told the story of a statistics professor who won a third prize in the lottery. One of his students asked him, "Sir, you're a statistics professor. You know that the odds are against you. So why did you play?" The professor replied, "Well, somebody's got to win it." That is true, and you only have to win it once. Or maybe not. There have been many stories and documentaries about people who won the lottery only to end up worse than before. What's the problem there?
The point I want to make is that I think more middle-class and upper middle-class folks should be playing the lottery. These are the people who, if they won the lottery, would buy real estate, spend on education, invest in businesses, and donate to charity. I think it would be better in terms of both personal utility as well as social utility. However, it is also in these educated circles that people think of playing the lottery as a waste of money and think of its horrible expected value. Insurance, however, is also bad from an expected value point of view, and yet everyone has it or wants it. I just want a dollar and a dream.
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