Having studied mathematics and physics for a long time, I develop a view that we can get an edge in any game related to gambling by adopting a probabilistic understanding of the game. This gut feeling comes from several facts I know. The first example is Mark Weitzman, who is a professional poker player with a master’s degree in physics from Caltech. The other example is Jim Simons, now a successful billionaire hedge fund manager, but also a renowned mathematician. Both are very successful in games related to gambling and with a solid background in physics and mathematics. In a 2014 talk, Jim Simons mentioned a mathematical model of the financial market is crucial to his company. However, I’ve never had a concrete example to demonstrate such a view, until March 5 this year. I ran into a simple example to demonstrate the value of strategy in a Yale financial theory lecture.
Red and black
I will introduce this interesting game in the Jupyter Notebook below. If you want to run the code and have more interactive experience, click the “Open in Colab” button at the top of the notebook. If you want to change the codes and play with them, simply save the code to your Google Drive and then you can edit them!
