From a game design standpoint, that was one problem with this design. Since half the tournament occurs in the first round (well, not counting the wildcard round), there's no drama; everyone gets shot down immediately. In the movie version of this, it'll come down to at least the Final Four before our hero gets knocked out, no matter how implausible the odds of making it that far are.
There's usually perfect brackets a couple rounds in. This year was rough. While the first round has half the games, they're usually a lot more predictable than later rounds.
This is probably my worst first round ever, anecdotally.
Hmm. I'm pretty sure I've seen more than 1 perfect bracket in the last 7 years on Yahoo, but I was certainly wrong about second round. Apparently there's only one documented case ever of a second round perfect bracket.
A friend and I today discussed if you had a perfect bracket after the great 8 round, going into the Final 4, would you, and for how much, sell a stake in your bracket to hedge your money?
The numbers, though it's a "billion $" bracket, that's actually $25M over 40 years, or an optional $300M single payout. In the US, you could expect about 55% of that after taxes, so $165M. There are 3 games left at the Final 4 game.
In an interview, Warren Buffet suggested that if someone was perfect at the Final Four, he'd offer to buy them out for the EV (or even half the EV). If you aren't already rich, you'd be an idiot to not take his offer. It pays for Warren Buffet to buy someone out for their EV, because that minimizes HIS risk.
Even if the person refused the offer, Warren Buffet could go to Vegas and bet on the last couple of games, as a hedge.
Even if you're perfect at the sweet 16 (which has never happened), with 15 games left (assuming each is a coinflip), your EV is 1/2^15 ~ 1 in 32000, so your bracket is only worth $300M/32000 ~ $9k.
I think it's even worse than a coin flip. At least with a coin there's a reasonable assumption that the odds are 50% both ways. Flipping the Duke/Mercer coin, though, you have have a maybe 95% of landing on Duke, which causes significantly more than 95% of people to put their money down on that, whereas with a normal unweighted coin you'd expect ~50% of people to bet on each side.
If Buffet only offered half the EV, it's likely you could sell your stake to another investor/insurance company/etc at something closer to the EV (maybe 90%+), so I think Buffet would have to offer close to that as well.
You could probably even find someone to sell a partial stake to which would get you set for life and still allow you to ride the bet to the end.
I would imagine most people would hedge at least one round earlier. A perfect bracket going into the elite 8 would have an expected value of ~1M after tax. Nobody would ride it past then. Of course, you end up running a 1/128 chance of being the unhappiest winner of a million bucks ever.
I actually think that if anyone had gotten through this weekend clean (48/48) the expected value is 9k pretax, and I think most would take that.
If these four teams are equally competent. Then you have 50% chance to choose each of three correct (2 final four games + 1 title games correctly). So the chance to win it all is (1/2)^3 = 0.125. Your expected return is $1B * 55% * 0.125 = $68.75M.
Or if you prefer a single payout, $300M * 0.125 = $37.5M. So considering inflation for $68.75M is over 40 years, maybe your expected return is between 37.5M to 50M (idk about 50M, I made it up)? Of course the reality is how much you would sell it very much depend on your conviction of how likely your guesses on final 3 games may be correct.
I'd argue that your chance of winning the bracket (or, at least, a valuation of it) is much higher than that given your ability to predict all of the matches prior.
(I don't think this would qualify as gambler's fallacy, though I'm welcome to counterarguments.)
>> I'd argue that your chance of winning the bracket (or, at least, a valuation of it) is much higher than that given your ability to predict all of the matches prior.
I believe the chance to win given you win all but three are higher than 12.5%. But MUCH higher? I am not quite sure. There are too many games this year can go either way, and predicting these games right is more on luck than technique analysis. Though winning all these previous prediction did gave you the credit in your expertise, but I am not quite sure about MUCH higher statement.
Like I have said "Of course the reality is how much you would sell it very much depend on your conviction of how likely your guesses on final 3 games may be correct.". As tournaments goes on, your feeling about we will win it all will change. Say Louisville will all the team 100-0 in previous game, yet you predicted them to lose at final four, you are more likely to sell your stake at a cheaper price than not.
It would also depend on what the situation was then. If you predicted this crazy team to exceed all expectations and make it to the final four and then lose, they could well be a significant underdog.
Buffet's offer of a buyout would be great. If not, at some point I would start betting big at vegas against my picks so I at least made some money if one busted my bracket.
Of course I am more likely to win the lottery (even though I don't play it) than I am to have to put my plan into action.
From a "get people to play with numbers" perspective, this was actually a pretty cool challenge on Warren Buffet's part. Most people are going to spray-and-pray (my facebook feed is full of facetious "shit, there goes my billion dollars") but I would be surprised if there weren't a large number of people who put more effort than they otherwise would have into trying to figure out statistical models for who wins basketball games.
This person submitted a Yahoo bracket, but it wasn't part of the billion dollar challenge. But still, 32/32 is nothing to shrug at. The rest of his bracket is pretty reasonable too, except for Oregon in the final four. Oftentimes, people who are correct after the first sets of games are people who don't have a very sound bracket and randomly chose upsets that happened to end up correct.
Notice how he's not entered into the Quicken Loans Bracket Pool? They also sent out an email to all the participants stating that nobody was left perfect, so I'm going to guess that he either filled out his bracket post-Round of 64 or was unlucky enough to not actually enter it into the Billion Dollar Challenge.
I think he simply entered it into Yahoo Sports, but didn't actually submit it to the Quicken Billion Dollar Competition. If he were in the Quicken competition, the bracket page would have it listed under "Pools" - which its not. But I'm not 100% sure.
It's not in the article but my guess would be that none of Warren Buffet's money was ever actually on the line. The last time Pepsi had a contest for $1 Billion, they bought insurance against someone meeting the conditions to win the prize. Who'd they buy that insurance from? Berkshire Hathaway.
Right, same deal this time as I remember reading about it. It is funny that Buffet gets most of the PR when Buffett's company is just making a fortune insuring against a very unlikely outcome. Normally the crazy people marketing the potential $1B payout (that buy insurance from some boring insurance company) would get the PR.
What? You didn't take 1 in a million odds because? The challenge was free. I took the challenge (and lost). To dismiss the challenge because of the long odds is silly. You left a free lunch on the table.
Elsewhere in this discussion someone posted this link [1] which claims that
Odds are that Buffett’s bracket isn’t worth your time,
however. Having a 1-in-7.4 billion chance of winning a
billion dollars is worth the equivalent of 14 cents.
That’s before accounting for taxes
I understand why you entered. It's for the same reason people play the lottery. People value a large payoff much more highly than a small one, even if the odds are worse for the big payoff.
I.e. for many people it's not worth betting $2 for a 1:2 chance of winning $4. That won't be a life changing event. But people are willing to bet $2 for a 1:175,223,510 chance of winning perhaps $100,000,000, even though those odds are much worse. That's how Powerball makes money. BTW I do bet on Powerball once in a while.
In my case I figured it wasn't worth betting $0.14 (because I knew it would take more than that of my time) to win $1,000,000,000.
It's not actually a 1 in a million chance though. It's more like 1 in 9.2 quintillion. I'd argue for many the time it takes to enter is worth more than those odds, not to mention giving up all the personal info to Quicken loans and Yahoo.
You appear to be discrediting opportunity costs (could those 30 minutes of researching brackets be better spent doing something practical?) and privacy costs (I'm sure Buffet's entries required a certain amount of personal information.)
LOL, this is hilarious. I was talking to my Girlfriend and all of my friends and I told them: You have a better probability, after being born, of becoming a billionaire just because you're alive versus you wining Warren Buffet's money. Then they countered, with: But if we play, we at least have some chance. I just laughed and got back to programming.
Looks like the final perfect bracket (even though it's ineligible for the Billion Dollar Challenge) is about to be busted anyway with VCU on the verge of beating S.F. Austin.
Buffet said he calculated what he thought the odds were of a perfect bracket and took a premium on top of that. I wonder what return he got on his $1B bet.
Upsets are common. However so many of them appeared I'm completely unsurprised the money is already safe. Watching brackets in my company pool crumble left and right had been crazy.
With weighted results, I wonder what the odds of this set of outcomes happening even was (note, some of the "upsets" by seed weren't really, like the CU vs Pitt game where Pitt ran them over).
From what I can tell, the still-perfect bracket is not in the Billion Dollar Bracket Challenge, but just at the top of the overall leaderboard among all brackets/pools on Yahoo.
They should have put more emphasis on the top 20 non-perfects winning 100k. That's still pretty good! But I suppose the goal was harvesting information for quicken loans so mission accomplished.
That would be the case if each of the games were played between truly equal teams. In fact, many of the games are much easier to predict than 50/50 since one team is better than another. So the expected value is actually higher, (though presumably still quite small, of course!)
This stunt actually makes me angry. Not a good PR move imo.
"I have enough money that I can risk giving up a billion $. And I may just give it to you if you can beat the odds that's harder than getting hit by lighting multiples times in 1 year."
How about offering pot of 100 million to top (aka sweep) 16 instead...
I would argue that as a PR move, it's pretty brilliant. It's been brought up countless times since it was announced, and it's been pretty hype up until now. Sure, it was basically a sure bet for Buffet.. But it spawned a community in itself[1] and captured the imagination of many. I'd call that a good move.
Not a good PR move? Is this because you think it is a bad idea for:
* quicken to get a ton of free mentions in the press with one month before
income taxes are due?
* this otherwise unknown gentleman from the midwest to announce to the world
that he has a lot of money?
It was sarcasm. I had hoped that including the bit about omaha would make it obvious. To be honest the motivator of the second option was:
"I have enough money that I can risk giving up a billion"
I had assumed everybody knew that Buffet had so much money. I did not understand how the commenter thought that this contest was going to be the way the world found out that Buffet was loaded.
it's quicken loans, not quicken, which aren't related except for the name. but the mindshare spillover quicken is getting from people like yourself certainly doesn't hurt (and didn't cost them anything!).
This does seem silly. According to the article, the odds of picking the correct bracket are less than 1 in 128 billion, so there is practically zero risk.
