From a young age, I was fascinated by playing cards. 52 cards, 4 suits of 13 cards in ascending order. I remember spending hours playing Big 2 during Chinese New Year. Playing cards are prohibited by all schools, but many students flout this rule and I enjoyed watching them play. Soon, I learnt about this esoteric sport called Contract Bridge. I fell in love with it. Hand strength, shape, bidding sequences, they all made sense to me intuitively.
When I hit 18, my parents brought me to a casino in Syndey, where the legal gambling age is set at 18. That was a playground for me. The shuffling of cards was like music to my ears. Blackjack, baccarat, casino war, Mississippi, I could see how the probabilities work out and the house edge. I have also played a little of Poker, although I do not fancy it due to the fact that competing against a human player is much harder than playing to a certain set of rules.
This forms the basis of my topic of discussion for today, which will be: risk.
Singaporeans are very risk-averse. In one of my classes, our prof introduced to us the St. Petersburg paradox. You can read more about it in the link below.
By doing simple mathematics, one can easily see that expected winnings from this game are infinite. How much will people be willing to pay to play this game? The next highest amount from mine was a full quarter of what I was willing to pay.
In my personal opinion, risks are something we will face every day. Whether it is crossing a road, or boarding a bus with a cup of hot coffee, we will take risks in everything we do. What can do is to take a look before we leap. By having a keen sense of the numbers, the reward, the cost, and not letting emotion affect our judgement, we can arrive at an optimal solution based on the information we have on hand.
However, I would also argue that there are some things that you have to risk everything for, regardless of the probability and the costs. For example, Mark Zuckerberg wouldn’t have known that Facebook would flourish in the current day and age. However, he took a leap of faith, abandoning his studies at Harvard to work on Facebook. Passion, love, happiness, these things are worth risking everything else to achieve. This is where you should put down the pen and calculator and say “Screw the odds, I’m doing it.” Of course, the payout associated with the risk may not materialise, but in these situations, wouldn’t you be happy you went all in?