Feb

7

 The latest contestant on the popular game show "Jeopardy" has found an unorthodox way to beat the game. Using game theory, Arthur Chu has managed to win 4 times in a row. His unorthodox methods have traditional Jeopardy fans upset as he follows the rules, but goes non traditional, and hits the big money first, then searches for the daily double. In fact, in one daily double, he found it in the category of sports (which he has little knowledge), and bet only $5. His style of play is to deny his opponents the big money, just like we try in the markets.

Anyways, Chu has upset the apple cart and won over $100K. Fans, along with the host Alex Trebec are visibly upset, but Chu is playing to win, not appease viewers or the host. This reminds me of speculators who get upset and blame HFT, flexions, the other side, etc. when they lose. They were mad at old man Rothschild when he had news of Wellington first and scooped the market. I'm sure that in the future, there will be many boogeymen to blame things on.

I applaud Mr. Chu for his out of the box thinking, and wonder why nobody has done this before, considering Jeopardy has had a 30+ year run. Mr Chu can teach us many valuable trading lessons.

Andrew Goodwin writes: 

This guy is a close friend of my gf. He has garnered much anger from the crowd. He has won four times in a row and is now being called the "Jeopardy Villain" by the press and fans of the show.

This is a take from the net describing his methods:

"What is Chu's game theory, exactly? While most players opt to stick with a single category and work through it from lowest to highest prize amounts, crossword-puzzle style, Chu begins with the most difficult clues in an effort to solve the Daily Doubles and doesn't hesitate to lay down the big bucks when he finds them in a topic he's familiar with. If the question belongs to one of his less-practiced knowledge categories, like sports, he'll only wager $5 and throw it away, knowing that it's off the board for his competitors. He also spat in the face of the $1-over wager tradition in Final Jeopardy, in which the extra dollar prevents a tie; instead, Chu intentionally bet to tie twice, though only once did he and his competitor (Carolyn Collins) both answer correctly and move on. This is not a humanitarian move, by the way, but it is a clever one (Keith Williams, former Jeopardy! winner and obvious math person, breaks it down for you in detail here.

Playing to tie increases your chances of advancing both because of game theory and mind-fu—- your opponent ("if your opponent knows you're going to wager for the tie, he might disregard a rational wager and go for broke in an attempt to tie you"). Chu is also quick to buzz in, which is perhaps the most useful Jeopardy! skill of all."

Chu has already won four games in a row and gets to compete again on Feb 24th. He is using game theory and statistics to beat the other opponents and has mastered them all so far using his unexpected system.

I suggest we watch to see if his play changes the behavior of the next opponents so that they match his tactics and alter the game show for good. This is the live popular culture version of the theory of ever changing cycles at work for all to see.

Far from a game of mere trivia knowledge, Jeopardy now is a game of greater complexity than thought previously due to the skilled tactics of Arthur Chu. Granted, I understand that Chu was considered a genius back in college, but he is not winning like Jennings in knowing all the trivia.

Adam Robinson would really enjoy this story.

Best regards, Andy


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4 Comments so far

  1. Darin Lockwood on February 6, 2014 7:45 pm

    Jeff, your are absolutely correct…and that is why our current way of Government is “playing the game” the way it is…the way it has always been played…no president will step up and play the game for the US to win…only themselves…why all democracies fall into totalitarianism…

  2. Shane Hurren on February 6, 2014 8:21 pm

    Typical. You don’t even know the difference between someone using their brain and playing by the rules to win and someone who cheats.

    Now you can say, in the markets there are no rules like in games. And that is true to some extent.

    Just one example. It doesn’t exactly take “out of the box” thinking to spy on people and follow their trades.

    If I sat back and followed everyone that had good trading systems from some remote and hidden source, or if I was able to locate my servers at the market and essentially front run trades… is this being better?

    I guess that’s for people to decide, but most people don’t even know the difference anymore. Most people don’t even know what is going on to be able to make the distinction.

    People have technology that they can use to make money with insider trading by taking ideas out of peoples brains or their living rooms. We can say this is okay? Hmmmm. Well, at the absolute least people shouldn’t be sending Martha Stewart to jail for insider trading when all the Wall Street yahoos are cheating with advanced technology.

    Makes one think….is Steve Cohen really a super trader? One wonders.

  3. jeff watson on February 7, 2014 3:18 pm

    But remember, as the Chair likes to remind us is that the purpose of the market is to take from the weak and put it into the hands of the strong.

  4. Shane Hurren on February 7, 2014 7:11 pm

    Interesting my dear Watson.

    Is this what the markets were originally setup for? Possibly. Or maybe the chairs “chair” needs to be reupholstered.

    Often things evolve over time so they become something else and the primary reason for their existence is lost.

    An example. As you may know… paper towels were originally made for the wiping of the hands and what not. Maybe cleaning up a counter mess or two. They have strength and can absorb a mess… so they say.

    I enjoy the paper towel, not enough to make love with it, but certainly enough to use as toilet paper. It’s cardboard like strength and feeling of grit against the anus while wiping can be displeasurable, BUT, if one bites down hard and bares the pain one will come away with a clean undercarriage.

    This is an example of evolution in action, but I would argue an advantageous one.

    But, not all forms of evolution are so. Many of the “goings-on” in the world are not. Many I see in markets aren’t.

    This Jeopardy fellow should be praised, but the ones who steal shouldn’t.

    Now, I guess we can begin to argue about what the word steal means. I would say it is completely fine to use other peoples ideas as long as they put them out there knowingly.

    Of course, we will never live in a perfect world where everyone will follow rules.

    But, when people start using technology to invasively steal souls and ideas out of the minds of others and shit them out all over the world…. well, we are certainly dealing with a level of crazy that is beyond what most people have to endure in their daily lives.

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