The idea is that if the coin flip goes in the player’s favor, they win double their bet. After winning, they can either collect their winnings, or risk them all on another coin flip to have a chance at doubling them. The initial bet is fixed at, let’s say $1.
Mathematically, this seems like a fair game. The expected value of each individual round is zero for both house and player.
Intuitively, though, I can’t shake the notion that the player will tend to keep flipping until they lose. In theory, it isn’t the wrong decision to keep flipping since the expected value of the flip doesn’t change, but it feels like it is.
Any insight?
If you have 100$, and you bet 1$ at a time, infinitely, you will lose.
More generally (simplified to assume you’re always betting the same amount):
P(ruin after X bets) = (edit: I removed my formula because it was wrong…but I’m sure you could mathematically prove a formula)
You’re saying that the player pays a dollar each time they decide to “double-or-nothing”? I was thinking they’d only be risking the dollar they bet to start the game.
That change in the ruleset would definitely tilt the odds in the house’s favor.