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westward comments on Mathematicians and the Prevention of Recessions - Less Wrong
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Is this accurate?
It seems like there is no ceiling to profits, but a clear floor on losses from the bettor's perspective. If a $100 Billion company bets on a coin toss, it can be $150B bet or a $250B bet and if it wins, it gets $150B or $250B, but if it loses, the company itself is bankrupt, and loses $100B. The portion greater than its value is assumed by its creditors, and doesn't really factor into the decision.
How is my reasoning faulty here?
My implicit assumption is that the "someone" in question has billions to lose. Obviously, you or I are not going to start losing billions.