Chapter 2

Here’s a more organized breakdown of history, experience, and reconciliation of the two:

1. Strategy

• Agent: The entity carrying out the strategy. In this case, it’s the roulette wheel—an external system with predefined rules.

• Principal: The driving force behind the strategy, which could be interpreted as luck, fortune, or chance. We suggest that the gambler believes they are engaging with a larger, almost metaphysical principal, perhaps God or fate.

2. Payoff

• Nature of the Payoff: The gambler is Man, not a professional speculator, meaning their expected payoff is speculative, not based on a calculated advantage but rather on hope or addiction.

• Recipient: The gambler expects the payoff to be provided by fortune or luck, embodied by the randomness of roulette.

3. Nash Equilibrium

• Gambler’s Equilibrium: In this scenario, the Nash equilibrium might reflect a point where the gambler believes they can continue playing indefinitely, expecting an eventual radical shift in their fortunes.

• Real Equilibrium: In reality, the equilibrium might occur when the gambler exhausts their resources, as continued play increases losses due to the house edge, but they fail to adjust their strategy. Because equilibria are predetermined, here one is no more than Animal in the stakes.

Summary

The gambling addict identifies their strategy through an external system (roulette) and acts under the belief that fortune or chance will eventually deliver a payoff. Despite this, they fail to recognize the true Nash equilibrium—where the house edge ensures continued play results in consistent losses rather than a radical reversal of fortune.