Chapter 12 · Worked solutions
Chapter 12 workings: The Wisest Idiot in the Room
Chapter twelve worked: your number against a sharp close, a tiny edge in pounds, the error of a crowd average, and closing line value on a 6/4 bet.
Exercise 1 strips the margin with the additive shortcut from chapter 8, the one the margin remover lists as additive.
The exercises
65 per cent against a sharp 4/6
Treat 4/6, 14/5, 9/2 as a sharp close. You made the home side 65 per cent beforehand. Fair close, EV at 4/6, and what to do next.
Fair close
Implied 60.00, 26.32 and 18.18 per cent, booksum 104.50. Taking an equal 1.50 points off each: 58.50%, 24.82%, 16.68%.
EV on your number
0.65 × 1.6667 − 1 = +8.3p per £1.
What it means
A six-and-a-half-point gap with a sharp close is usually my error, not the market's. Find the information the market lacks, or let the long-run record decide.
The answer
Fair home 58.5 per cent; EV +8.3p on your number; distrust it and look for the reason before staking.
Buchdahl's +0.08 per cent in pounds
At £10 a bet on 66,954 bets, how much is staked and what is +0.08 per cent worth? Compare with one £10 winner at 66/1.
Staked
66,954 × £10 = £669,540.
Edge
0.08 per cent of that = £535.63.
One fluke
£10 at 66/1 wins £660.
The answer
£669,540 staked for £535.63; a single 66/1 winner beats it.
How wrong is the average of 400?
Individual estimates miss by 8 points, independently and without bias. How far off is the average of 400, and which assumption fails on derby day?
Square root rule
8 ÷ √400 = 0.4 of a point.
What carries it
Independence and no shared bias. A derby crowd's errors lean the same way together, so independence goes first.
The answer
About 0.4 of a percentage point; independence breaks on derby day.
6/4 taken, 11/8 fair close
You took 6/4 and the fair close was 11/8. What was the bet worth per pound?
Decimals
6/4 is 2.50; 11/8 is 2.375.
CLV
2.50 ÷ 2.375 − 1 = +5.3 per cent.
The answer
About +5.3 per cent of closing line value; chapter 30 makes it the scoreboard.
Related on this site
These are the workings. The argument for them, and the exercises themselves, are in chapter 12 of the book, The Wisest Idiot in the Room.
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