For a write-up on Parrondo Paradox please see a separate page. It appears possible to combine two losing games into a winning one.
Of the two losing games -- A and B -- the first one is simple, the other one is complicated. In simple game A, one wins or loses $1 with probabilities p and 1-p, respectively. Game B is itself a combination of two games, say B1 and B2, both being as simple as game A. In game B1 probability of winning $1 is p1, in B2 it's p2. In B, game B1 is played if the current capital is a multiple of integer
The catch here is that, in order for the paradox to occur, all three games A, B1, and B2 can't be losing. A typical assignment of probabilities would be
(As in the original paper by D. Abbott and G. Harmer, in the applet below, games A, B1, B2 are won with probabilities
Games A and B may be combined in many different ways. They can be combined randomly with a prescribed probability of selecting, say A. Or, their selection may follow a periodic pattern, like AABB, which means deterministicly playing two A games, followed by two B games, followed by two A's, and so on. The applet allows one to define up to 7 combinations (9 is the number of distinct colors that I clearly recognize as different in my browser. Games A and B take up two of the colors.) Just type the strings of A's and B's or real numbers (for probabilities) separated by space in the edit control at the bottom of the applet. Each trial consists of a specified number of games (100, originally), and you can also specify the number of trials (500, originally).
|What if applet does not run?|
You may observe that the period ABBAB is by far the best strategy for
On the Web
- Brownian Motor, Franz-Josef Elmer, University of Basel (Java simulation)
- J. Havil, Nonplussed!, Princeton University Press, 2007
- Internet Bibliography of the Paradox by the inventor, Juan Manuel Rodriguez Parrondo
- Lee Spector's CGI Simulation (Hampshire College)
- Paradox in Game Theory: Losing Strategy That Wins, Sandra Blakeslee, The NY Times On the Web
Copyright © 1996-2018 Alexander Bogomolny