Uncle John’s
Band
I live in a silver
mine and I call it beggar's tomb
I got me a violin and I beg you call the tune
Anybody's choice, I can hear your voice
Wo, oh, what I want to know, how does the song go
What is
choice?
Choice is inherently random. You can choose or not choose. That is what choice is all about. A popular example of random events in the United States is Las Vegas casinos. Those casinos feature games of chance. But there are odds dictating the payouts on its games of chance. Statisticians help the house set those odds, to ensure that the game is random, but there are still ways to make sure that the house has an advantage in the payout.
The steps in setting the payout, without ensuring that the house gets a cut, is
to first find the odds of each outcome and make sure that the payout is consistent
with those odds. Thus in a game of roulette, with no zero or double zero slot, the
odds of the roulette ball landing in an odd slot are 50% and the odds of landing
in an even slot is 50%. If there is one zero slot and that slot is defined as
neither odd nor even, then the odds drop to 18/37 odd, 18/37 even and 1/37
zero. If the payout is still 18/36 for odds or evens, then the house makes
money on every bet because there are 37 outcomes, not 36.
If the odds are not set in advance but by the bettors, parimutuel
betting, then first the house cut is taken off the total amount bet, and the amount
bet on each outcome dictates how the remainder is allocated for each outcome.
Whenever you see the word choice, whether, as in my field of travel demand forecasting, it is destination
choice, mode choice, route choice; the method includes a pseudo random number generator;
or is based on maximum entropy or maximum likelihood; it is setting the odds of
a random event. Forecasting under these circumstances is trying to set the odds.
Forecasters may not always dress like racetrack touts in a Damon Runyon story,
but the similarity should never be forgotten
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