En Tenants Challenges

You have the best of it when you have a positive expectation, and you have a positive expectation when the odds are in your favor. You have the worst of it when you have a negative expectation, and you have a negative expectation when the odds are against you. Serious gamblers bet only when they have the best of it; when they have the worst of it, they pass. What does it mean to have the odds in your favor? It means winning more on a result than the true odds warrant.

 

The true odds of a coin’s coming up heads are 1-to-l, but you’re getting 2-to-l for your money. The odds in this instance are in your favor. You have the best of it with a positive expectation of 50 cents per bet. Here is a slightly more complicated example of mathematical expectation. A person writes down a number from one to five and bets $5 against your $ 1 that you cannot guess the number. Should you take the bet? What is your mathematical expectation? Four guesses will be wrong, and one will be right, on average.

 

Therefore, the odds against your guessing correctly are that in a single try you will lose the dollar, However, you are getting $5-to-$ 1 on a 4-to-1 proposition. So the odds are in your favor, you have the best of it, and you should take the bet. If you make that bet five times, on average you will lose $1 four times and win $5 once. You have earned $1 on five bets for a positive expectation of 20 cents per bet.