Parrondo Paradox

Discussion in 'Risk Management' started by hihi, Sep 5, 2007.

  1. These and other papers out of the same group in Stockholm
    invoke the name "Parrondo" but do not construct actual
    Parrondo games.

    I have attached the original note from Nature. You will note
    that Parrondo game "B" is composed of two sub-games,
    one of which has to have a positive expectation. So the
    Parrondo two game paradox actually consists of three games.
    It is not applicable to trading because if you have three
    uncorrelated games, one of which is a winner, you are
    better off just playing the winner combined with cash
    rather than with one or both of the losing games.
     
    #11     Sep 8, 2007