Problem of points

The problem of points, also called the problem of division of the stakes, is a classical problem in probability theory. One of the famous problems that motivated the beginnings of modern probability theory in the 17th century, it led Blaise Pascal to the first explicit reasoning about what today is known as an expected value. The problem concerns a game of chance with two players who have equal chances of winning each round. The players contribute equally to a prize pot, and agree in advance that the first player to have won a certain number of rounds will collect the entire prize. Now suppose that the game is interrupted by external circumstances before either player has achieved victory. How does one then divide the pot fairly? It is tacitly understood that the division should depend somehow on the number of rounds won by each player, such that a player who is close to winning will get a larger part of the pot. But the problem is not merely one of calculation; it also involves deciding what a "fair" division actually is. Luca Pacioli considered such a problem in his 1494 textbook Summa de arithmetica, geometrica, proportioni et proportionalità. His method was to divide the stakes in proportion to the number of rounds won by each player, and the number of rounds needed to win did not enter his calculations at all. In the mid-16th century Niccolò Tartaglia noticed that Pacioli's method leads to counterintuitive results if the game is interrupted when only one round has been played. In that case, Pacioli's rule would award the entire pot to the winner of that single round, though a one-round lead early in a long game is far from decisive. Tartaglia constructed a method that avoids that particular problem by basing the division on the ratio between the size of the lead and the length of the game. This solution is still not without problems, however; in a game to 100 it divides the stakes in the same way for a 65–55 lead as for a 99–89 lead, even though the former is still a relatively open game whereas in the latter situation victory for the leading player is almost certain.