Finding an optimizing strategy for risk systems

• Main Author: Garcia, Michael F.
• Format: text
• Language: English
• Published: Animo Repository 1993
• Subjects: Mathematical optimization; Probabilities; Risk; Programming (Mathematics); Games of strategy (Mathematics)
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/16111
• Institution: De La Salle University

Risk systems refer to phenomena such as gambling, investing in stocks, and issuing insurance policies. The main problem in these systems is that of finding a strategy that would optimize profits. This thesis investigate one of the fundamental risk systems: games of chance, particularly dice games. An understanding of these controlled risk systems would provide insight to the more complex systems.In optimizing profits, there are exactly three factors which could be controlled by the player: the time of the risk, the location of the risk, and the amount of the risk. There is no optimizing strategy with respect to the time element. For the element of location, fallacies like the maturity of the chances were discredited by clarifying the meaning of the law of large numbers. Favoring the highest expectation rate location is optimizing for long experiments. For the amount element, the player's chances are optimized when strategies like bold play and the martingale strategies are employed. The ruin problem is pursued for both types which allowed comparison of strategies. The generality of bold play is posed as a conjecture.