Concept

Coherence (philosophical gambling strategy)

Summary
In a thought experiment proposed by the Italian probabilist Bruno de Finetti in order to justify Bayesian probability, an array of wagers is coherent precisely if it does not expose the wagerer to certain loss regardless of the outcomes of events on which they are wagering, even if their opponent makes the most judicious choices. Operational subjective probabilities as wagering odds One must set the price of a promise to pay 1ifJohnSmithwinstomorrowselection,and1 if John Smith wins tomorrow's election, and 0 otherwise. One knows that one's opponent will be able to choose either to buy such a promise from one at the price one has set, or require one to buy such a promise from them, still at the same price. In other words: Player A sets the odds, but Player B decides which side of the bet to take. The price one sets is the "operational subjective probability" that one assigns to the proposition on which one is betting. If one decides that John Smith is 12.5% likely to win—an arbitrary valuation—one might t
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