Monday, December 14, 2020

Revenue sharing is like a Kelly bet

 There are odds on a coin flip where one coin flip is  one cash payment (or draw). The Constitutional imbalance is a pay off rate.

But, we add in the double spending connection, and we get a three color Kelly bet, allocating bets (or coin tosses) over three binomials, or one three sided coin. Both approaches should work.

In revenue sharing the pay off is variable, adaptive as external events cause rate changes in double spending. The betting ratio is your Boltzmann sampler, takes you from Bayes space to sample space.

The Monetary base is a Kelly bet.

But the coin tosses are spread over 15 years, about 60 coin tosses. The 15 year bet is bond interest vs double spending vs taxes. It is the same problem, and entropy maximizing means we always try to be ergodic. The coin weights are fixed at contract time, but pay outs can vary. The coin will, in fact, have that weighting throughout or until Congress exits. Any tax paid, interest earned, or inflation gained is subject to the known coins weights.

No comments: