Morgan Stanley Traders Lost $390 Million in One Day in August

[Hydroblunt]

Quote from GTS:

You can try to spin this any way you want but there is no case in which your statement in bold below is correct. The odds are never 50/50 - clearly you didn't understand that when you posted, its not clear if you understand it now.

It would be nice if folks would just admit it when they made a mistake rather than compound it by becoming argumentative about it.

Your medal is on the way.

CONGRATULATIONS!!!

Make sure you post it up on your wall as you attempt to trade, you'll need it.

Anyway you splice it, when you have two cups in front of you, it's a 50/50 situation that a coin is under one of them. Of course, the whole situation, when drawn out in a decision trees shows 1/3 and 2/3 probabilities.

I never stated you were wrong, btw, the numbers to the problem are posted all over the internet anyway.

 

[GTS]

Quote from Hydroblunt:
Anyway you splice it, when you have two cups in front of you, it's a 50/50 situation that a coin is under one of them.

Oh yea, its clear you "get it" alright. 50/50 situation?!? I love how you are trying to carefully dance around the truth without using any words that you now realize are false. You can't say 50/50 chance or 50/50 odds, so its a 50/50 situation - whatever the hell that means. Are you clumsily trying to say there are two possibilities and trying to spin that to justify your previous mis-speak about 50/50 chance? Keep tripping on your own tongue, its hilarious.

Quote from Hydroblunt:
Of course, the whole situation, when drawn out in a decision trees shows 1/3 and 2/3 probabilities.

Anyone with half a brain doesn't need to draw a decision tree to figure this out, its common sense, remember?

Quote from Hydroblunt:
Not drawing decisions trees or Venn diagrams here, just common sense. Try it sometime.

Like the "common sense" you exhibited here:

Quote from Hydroblunt:
Look it's simple. When there are 3 cups, it's a 1/3 chance you are right and 2/3 that you are wrong. Once one cup is removed, it's now 50/50 but only so if you actually make the switch

 

[ptunic]

Sorry I have to agree with GTS and sjfan on this.

There is just one possible answer. 1/3 if you choose the original, 2/3 if you switch. Anything else is absolutely incorrect.

You can do this test with a cup and coin and friend 30 times each way (choosing the original, versus choosing to switch). You will see the results will approach 1/3, and 2/3 respectively, the more times you do this mathematically deterministic process.

50% and 1/6 are traps-- they are incorrect though logically tempting (I was fooled too originally I must admit). If you do this test empirically, you will see 1/3 and 2/3 are the only correct answers involved here. Empirically, after any reasonable sample size (30+), 50% and 1/6 are not numbers that will be approached in this problem.

I'm a bit surprised there is even debate (about the outcome) when the answer can be empirically proven with a cup, a coin, a friend, pen/paper, and about 10 minutes.

 

[Equalizer]

Don't be surprised. This is counterintuitive for many. As can be seen from this thread, most people are probabilistically challenged.

 

[ptunic]

Yup. Admittedly I was fooled myself, and had to resort to cheating.

I tested the hypothesis empirically, and when I found I was wrong (switching was 2/3 instead of 50%), I tried to work backwards and figure out it. Even knowing I was wrong, it took me some time to get through the problem and look at it from a valid perspective.

 

[Hydroblunt]

Quote from GTS:

Oh yea, its clear you "get it" alright. 50/50 situation?!? I love how you are trying to carefully dance around the truth without using any words that you now realize are false. You can't say 50/50 chance or 50/50 odds, so its a 50/50 situation - whatever the hell that means. Are you clumsily trying to say there are two possibilities and trying to spin that to justify your previous mis-speak about 50/50 chance? Keep tripping on your own tongue, its hilarious.

Anyone with half a brain doesn't need to draw a decision tree to figure this out, its common sense, remember?

Like the "common sense" you exhibited here:

You want a statue now or something? I already congratulated you on your stupendous victory.

In real life, you don't get to pull out your computer, running excel and start drawing decision trees. You see 3 cups, then you see 2. If you can't get it through your head that when there are two cups, it's a 50/50 that ONE coin is under either of them, try it out. Put two cups in front of you, put a coin under one, shuffle it and then pick it over and over 100 times.

I'm treating it as an independent event, which it really is not, but in REAL life, your brain is not connected to a probability calculator with conditional inputs. It's just not how we think, well most of us. That's why Stats is a major & course in school and why ppl who love stats tend to be...weird. That's why quants get blown out in common events they consider to be 1 in 100,000 years when it's common sense that if you have all these hedge funds running essentially the same methodologies, they are just asking to be taken for a ride.

I laid out an explanation in layman's terms because it's obvious that many are having problems understanding the whole decision tree process & probability, as all of us have at some point in time (not you of course). Of course it's not 50/50 with the condition, but you & the pompous ones alike are failing to recognize that to show that it's 2/3 requires an explanation that right away starts a pointless debate due to improper explanation & understanding. I know exactly where it comes from because I absolutely HATE statistics.

You reply with a deragatory post, suggesting I take remedial math, when all you could have said is that the odds are actually 1/3 and 2/3 when properly worked out. I NEVER disagreed with your insulting reply anyway. But truthfully, I felt like not conceding to you in a respectful manner, cause:

A) You showed disrespect

B) You're obviously a pompous A$$HOLE

C) It's laughable to me the assumption you make about my mathematical skills, considering I never had to take any Calc in college since I did all of my reqs with top grades in high school.

 

[Capablanca]

Ptunic, if you try to illustrate the ENTIRE scenario from the beginning, you will see the direction from which a 1/6 computation was made. Note I am not saying this is the final answer. What I am saying however is that it is perfectly reasonable to use such a calculation in coming up with the answer.

Why bother? Well batman28 mentioned using it and he was met with lots of bluster despite the problem being solvable going this route. Furthermore, doing it through a decision tree gives a step by step process of the logic involved and makes it easier given the limited number of branches of this particular problem to get answers to other related questions. For example try answering this additional question:

The current contestant is very emotionally unstable. If he winds up choosing the cup with the ball he'll be fine. If he chooses and ends up with a cup without the ball he'll be upset. If he chooses the cup with the ball but later ends up settling for one without it he'll be EXTREMELY upset. What are the chances he'll be extremely upset? Show your solution.

 

[IluvVol]

Quote from Capablanca:

Ptunic, if you try to illustrate the ENTIRE scenario from the beginning, you will see the direction from which a 1/6 computation was made. Note I am not saying this is the final answer. What I am saying however is that it is perfectly reasonable to use such a calculation in coming up with the answer.

Why bother? Well batman28 mentioned using it and he was met with lots of bluster despite the problem being solvable going this route. Furthermore, doing it through a decision tree gives a step by step process of the logic involved and makes it easier given the limited number of branches of this particular problem to get answers to other related questions. For example try answering this additional question:

The current contestant is very emotionally unstable. If he winds up choosing the cup with the ball he'll be fine. If he chooses and ends up with a cup without the ball he'll be upset. If he chooses the cup with the ball but later ends up settling for one without it he'll be EXTREMELY upset. What are the chances he'll be extremely upset? Show your solution.

No, the one in this whole thread who turns things around the most is you brother. You messed up completely half through your posts and just cannot admit. Nobody contests your decision tree solution but its laughable you now dance around as if you came up with the right answer first. In fact you presented the wrong answer over more than half of your posts. So, dude, I recommend you play the ball low and enjoy the fact that you also now understand where the solution comes from, although the way you solved it is probably the longest winding and most unnecessary. If you knew Bayes then you could have solved it in 1/6 of the time (hmm, where did this 1/6 come from....;-)

 

[GTS]

Quote from Hydroblunt:

In real life, you don't get to pull out your computer, running excel and start drawing decision trees. You see 3 cups, then you see 2. If you can't get it through your head that when there are two cups, it's a 50/50 that ONE coin is under either of them, try it out. Put two cups in front of you, put a coin under one, shuffle it and then pick it over and over 100 times.

I'm treating it as an independent event, which it really is not, but in REAL life, your brain is not connected to a probability calculator with conditional inputs.

The problem, as described, never has the odds of the coin being under a cup as 50/50. I don't care what other examples you come up with, how your brain is or is not connected or how great you did in high school AP math.

I'm tired of reading your long posts which are a combination of "yes I know I was wrong" and "here is why I was actually right and it is 50/50".

 

[sjfan]

Quote from Capablanca:

Fine. I think I already did this but the spacing came out badly. We'll see how it goes this time.

I'm not trying to be rude, but will you write out the four branches in words? I'm having a hard time following what you are doing - with the spacing at all. I do want to try to give you a valid reply once I figure out what you are doing.