lecture16: Gambling and Information Theory

Topics covered

• Fixed-Odds Horse Racing
• Example
• Betting Strategies
• Some History
• Formulation
• Maximising Wealth Growth
• Example Run of Kelly's Strategy
• A Simple Bet
• Simple Bet: Payoff
• Simple Bet: Under and Overbetting
• Caveats
• Criticism from Modern Finance
• Approximation of the Stock Market