Accuracy of the insurance index and insuring for less

[johndoe]

"Incredibly amused" may be pushing it a little

To be fair "insuring good hands" is indeed a ploppy strategy which has nothing to do with JG's analysis... Do you find it surprising that only a (small?) minority of posters have read JG or gone into depth on these points ? I would say that you have to be fairly serious about AP and/or interested in fine points of the game, some of which are purely theoretical. I myself don't own BC - just borrowed a copy from a friend

OK, just mark me "amused" then.

Sure, I'm not really surprised; it is a finer point, but an important one that IMO shouldn't have been dismissed so abruptly. The focus on EV is the natural tendency, and is usually appropriate, but variance is important too - especially when the difference in EV is comparatively small, and/or the stakes are high.

 

[ArcticInferno]

I'm sure I'm not the only one incredibly amused that you'd consider one of JG's analysis as equivalent to common gambler's superstitions!

Read and learn:

http://www.blackjackinfo.com/bb/showthread.php?p=147055#post147055

ExhibitCAA does understand that the insurance bet is independent of the hand dealt.
The point he’s making is with regards to variance, not the overall winnings.
He fails to analyze the cost of insuring all blackjacks.
The variance will certainly be zero, but at what cost?
Taking insurance (or even money) at all counts is much too costly.
If you stay home and watch TV, then your variance and overall winnings will both be zero.
If you insure all blackjacks, then your variance for that round will be zero, but you will lose money overall for insuring all blackjacks.
Staying home and watching TV is a better proposition than insuring all blackjacks.

By the way, you really need to learn to read carefully.
The quote, “Always take even money because that’s the only sure bet in the house.” is different from ExhibitCAA’s analysis regarding variance.
That quote is a misconception, and has nothing to do with variance or risk aversion.
You misunderstood, which is expected from someone who seems impulsive.

 

[ArcticInferno]

OK, just mark me "amused" then.

Sure, I'm not really surprised; it is a finer point, but an important one that IMO shouldn't have been dismissed so abruptly. The focus on EV is the natural tendency, and is usually appropriate, but variance is important too - especially when the difference in EV is comparatively small, and/or the stakes are high.

The analysis of variance is not a finer point, as you state.
We all understand the relationship between EV and variance.
Who doesn’t know that a wide bet spread will certainly increase the winnings, but at the cost of high variance.
If you scroll up and read my other posts in this thread, I do clearly state that a negligible winning isn’t worth weather the variance/fluctuations.

 

[iCountNTrack]

Let us all be nice to one another on this New Year.

 

[ArcticInferno]

Let us all be nice to one another on this New Year.

I'm not sure if the Big Brother censorship was necessary.
I would personally set the bar at the f-word and other words prohibited by the FCC.

 

[Automatic Monkey]

If you know that you will lose (albeit little) in the long run, what would be the point?
What do you gain, or hope to accomplish?

A couple of reasons. One is cover. Another is if you're using an unskilled player to help you get big bets down, you can just have them always insure when they are called in.

 

[Blue Efficacy]

Camoflage aside,...
Blue Efficacy, with all due respect:
Insuring only the “good hands” is a ploppy misconception.
Insurance is a side bet independent of the hand dealt.
By variance, do you mean overall variance or the variance of the insurance side game?
The variance of the insurance side bet can be reduced by playing the insurance side game only at extremely high counts, at the expense of reducing the overall winnings from the insurance side bet.
Insuring only the “good hands” will have zero effect on the outcome,... long-term, short-term, overall, etc.
Insurance is an independent side game, and you must assess the probability of a ten being in the hole. A “good hand” or a “bad hand” won’t change the probability of a ten being in the hole. The ratio of tens to non-tens of the remaining deck composition determines the probability of a ten being in the hole.
Insurance is a strange animal in that even veterans who have written books sometimes misunderstand the mystery of insurance.

If you insure all 20's, or at least when the count is not quite negative, this will lessen the number of times you lose when dealt 20. I am not stupid and know that the value of one's hand doesn't affect the odds of the dealer having BJ moreso than the two cards it contains being 10s or non-tens.

I am looking at the big picture here. With 19, 20, 10, or 11 you have a good chance to win even against the ace. My point here is MOST OF THE TIME it is a win/win situation. Either you get to collect on the insurance payoff, or you get to play a strong hand. Do you understand what I am saying? I am not saying it is the mathematically optimum way to do it, but what's mathematically optimum isn't always best. (See: soft doubles)

 

[alwayssplitaces]

If you're uncertain about the insurance correlation at +3, then just insure your "good" hands like 19, 20, and take the even money on blackjack. At +4 and above, insure everything, and at +2 and below, insure nothing.

If the insurance bet had zero house edge at any time, you'd take it only to reduce variance.

 

[bj21abc]

Ins sims

This is quite interesting: Game simmed is 6D DAS S17 LS 4.5/6.

Couple of small points: this is not "insure all big bets" as AM suggested - sim was ins as per TC after round dealt - the count may have changed since the bet was placed - we know RC has gone down by one (the dealer ace upcard). I guess I could have switched off "recalculate TC before insurance decision" - next time...

Also, I happened to sim an LS game - which reduces variance somewhat (15, 16 vs A) if the hole card is not an ace.
Count is HiLo floored.

STILL as AM said, the cost of insuring all big bets appears to quite low, and make for some camo.

 

[ArcticInferno]

It seems that the confusion comes from misapplying the concept of variance, and the cost of variance.
As ExhibitCAA clearly stated in his post, the variance is reduced in that one particular round. What???!!! Only one round???!!!
Is that how the concept of variance is usually applied? Round per round?
Let’s recap the ploppy misconception here:
If you insure a good hand, even if you lose the insurance bet, you may still win the hand.
If you lose the hand to the dealer’s blackjack, you still win the insurance bet.
That sounds reasonable, and almost logical, but it’s only an optical illusion.
If you insure at low counts, you actually lose money because the EV is negative, which is different from not taking full advantage of a positive EV situation.
Let’s look at some other situations where variance can be reduced and analyze the cost.
If you don’t split two tens, then the winnings will be reduced, but the variance will also be reduced for that particular round. You don’t lose money here. The EV is still positive. You just don’t win as much.
If you hit 11 vs Ace instead of doubling, you will again reduce variance, but lower your EV as well, although EV is still positive.
Should we look at variance round per round, or should we look at the overall variance?
The reduction in variance locally in one particular round is irrelevant! The global variance of the shoe, the day, the trip, the month, etc., is what’s important.
Not taking full advantage of a positive EV is bad enough, but to lose money to reduce the variance locally in one round is preposterous!

By the way, did you know that someone actually wrote a book on how to win blackjack in the short-term? He states that blackjack can’t be beaten in the long-term, but his system will allow you to win in the short-term. I didn’t have time to skim through the chapters in the bookstore, but I couldn’t believe a publisher would actually print his book.

 

[mmeyers]

Insurance bet

ExhibitCAA does understand that the insurance bet is independent of the hand dealt..

This is not what ExhibitCAA said to SleightOhand on August 26th, 2009.

SleightOfHand says: "Remember that the insurance bet is INDEPENDENT of the regular BJ bet. This means are actually ADDING variance due to the bet in addition to your regular bet.".


This is not true! "Insurance" is a great name for the bet, and as far as the gambler's perception of the bet, it is aptly named. Take the simplest example: if you have a blackjack, then taking "even money" (equivalent to buying insurance in a 3:2 game) lowers your variance on the hand to ZERO! When you push the blackjack, the insurance bet pays off; when you win 3:2 on the blackjack, you lose the insurance premium that you just paid. The two bets are not independent at all--they are negatively correlated. .

mm

 

[FLASH1296]

The most eloquent analysis of taking INSURANCE to reduce variance was published by James Grosjean.

Taking Insurance against your BJ's [and 20's at all but negative T.C.'s] is a move that I like.

I do it loudly of course, and enjoy the "cover" aspect along with the variance reduction.

 

[mmeyers]

The most eloquent analysis of taking INSURANCE to reduce variance was published by James Grosjean.

Taking Insurance against your BJ's [and 20's at all but negative T.C.'s] is a move that I like.

I do it loudly of course, and enjoy the "cover" aspect along with the variance reduction.

I agree with you 100%. I didn't realize this until yesterday. It is amazing who might pop in the chat room and spread their wisdom with others.

mm