<t>It depends on your skill level and how the other people are playing.Suppose everybody is just crazy and they have all-in-a-thons, and you suck at poker. In that situation, I'd take the first option and fold almost every hand. Sometimes, had you sat there and simply folded every single hand you wo...

<t>Isn't there an easy way to solve this problem???1- The prospectus tells you what the risks are and what the management fees are. For the sake of simplicity, we'll ignore most of the risks like index tracking error.As far as management fees go, they will absolutely drag the price down. They may al...

<t>Well to look at specific examples:1- Warren is selling puts on BNI and simultaneously buying stock. His stock purchases presumably put an upward pressure on the stock price (or at least stops it from falling very low). I think these stock purchases affect the value of the puts he is selling. Exer...

<t>I've been reading up a lot on value investing (e.g. Joel Greenblatt's books) and the value investing approach looks at options pricing quite differently than quantitative finance.One key insight of the value investing approach is that there are businesses underlying securities, and that the marke...

<t>Perhaps the real world answer to that problem is that these aren't real pirates.Suppose somebody asked you to join their pirate operation, where your payment is according to the problem. The compensation structure is entirely screwed up and there is zero (or negative) incentive for particular pir...

<t>A possible explanation for above expected return offers is to protect the insurer against most contestants behaving rationally. Suppose rational behaviour = maximizing expected return. In that case, if the banker only made negative ER offers, then most contestants would never make a deal. This wo...

<t>Mike, it could be that making offers above expected return makes the show more exciting. However, I don't think the average viewer actually calculates the expected return. Most contestants it seems don't do it... I wouldn't expect the average viewer to be doing it. They'd either need a calculator...

<t>I think one should consider the motivations of the various parties involved.Depending on how the show is financed, the production company may not be able to take the risk of multiple people winning $1 million (especially if there is undetected cheating). So they may insure the contestant's winnin...