I have $700 in cash but am $100 short. I need to make it $800 so that I can pay my drug dealer. He has already sent round his boys to rough me up, and I need to stump up the cash tomorrow. There is a game at the casino that has 50-50 odds.
I come up with a three-step strategy that looks fool proof.
(1) Bet $100 on the first round. If I win I can leave with $800, if I lose I still have $600 in my pocket.
(2) Bet $200 for the second round. If I win I will have the $800, if I lose I have $400 left.
(3) Bet the entire $400. If I win I have $800, but if I lose I’m cleaned out.
My strategy is equivalent to tossing a coin three times—if it comes up heads just one of those times then I’m onto a winner. The chance of losing three times in a row is small: 50% x 50% x 50% = 12.5%. Therefore the odds of winning are 87.5%.
However the casino manager hears me discussing my strategy before I begin my opening gambit. He knows that if I am 87.5% likely to win then he is 87.5% likely to lose. Should he kick me out or let me stay? And if he doesn’t kick me out, why not?
We know from experience that the casino manager will let me play. If it was a one-off bet he should not allow it, but if many people are playing with the same strategy, on average 12.5% will lose their money. The more customers that play the better for him, as the net balance will move closer to zero. The house will then take their cut as a percentage of all placed bets (the green zero on the roulette wheel serves this end).
My strategy is valid if I go to the casino just one time. If I return the next day, or even the next year, my overall chances of winning fall. The more times I play the closer to parity the odds become. But when I take each visit to the casino as an isolated event, I am always 87% likely to win. Looking at it that way, I can feel optimistic about the outcome every time. Getting hooked has never been easier.
The error is to view each bet we make in isolation, and these bets are not restricted to the casino either. We separate the important events in our lives and assign them their own risk. We must be cautious with some things and can be flippant with others. The Sword of Damocles hangs over our heads and every decision we make weighs in the balance. By treating each decision as a standalone event, with its own risk profile, we can minimize error and improve our overall chances of success in life—or so we think.
Our lives are made up of countless decisions and gambles, and their net result must per the laws of statistics converge to parity. Over time we win and lose in equal amounts. There is no progress without equal regress. It may seem that we are making progress (or not) but that is because we ignore the true cost of achieving this progress. And this cost might not become evident till much later. In medical science these are the ‘side effects’ that are usually overlooked because we assume, rightly or wrongly, the return is greater than the cost—which in itself is another gamble.
We are hooked into a game of chance that is based on a flawed principle that human can make progress simply by means of good decision making. Whatever setbacks we encounter along the way, overall our path will lead us in the right direction—the direction of progress. When we eventually see through the scam, the point at which we are at right now, what will happen to us? Will we find a way out of the matrix? Or will we just learn to play with greater abandon? All bets are on!