In today’s blog I am going to outline the value of information to gamblers.
As I have already mentioned in my previous posts, the value of information can be best described as the maximum price one should pay for knowing the actual value of an uncertainty before deciding on a course of action (business-dictionary.com).
In gambling terms, this simply means the value one would place on the cost of information before placing a bet. As other bloggers have mentioned the characteristics of good information are as follows:
-Accurate – Timely – Relevant – Sufficient – Worth its cost. All these characteristics are vital for gamblers. Take for example the sport of horse racing which has a big gambling culture associated with it. Gamblers try to find the best possible price from the bookmakers, so this may require shopping around any weighing up your options. However before the bet is placed the gambler will have many sources of information at his disposal. First of all the odds of the horse will be the bookmakers guide to the horses chances of winning the race. In the bookmakers view a horse with a price of 2/1 has a much better chance of winning then a 10/1 horse. The bookmakers make these odds to minimize their losses but yet take enough of a risk to allow the gamblers to have a bet. The bookmakers calculate these odds using information about the horses form (recent results), breeding (has the horse good genes) and also talk on how the horse is performing in training This information will be gathered for every horse and both the bookmaker and the gambler will have access to this information, all though some information can be expensive to come by.
The gambler has to ask himself is the information he is receiving meeting the criteria of good information which I have outlined above. If you don’t expect to change your decision after receiving this information, or you think that the expected value of the information (the chance you change your decision times the relative value of the decisions) is lower than the cost of the information, then it may be a waste of time conducting the research of the information.