Dave is going to the world series fo poker next month with someone staking his full $10k buyin. After seeing this, Patri offered up some of his winnings. They are both are paying out the same rate of %50 of their returns.
Here’s a couple of interesting things.
All this swapping and buying and selling of players is a great idea for a determining value for poker players. If patri and dave do a normal swap for %10 of the $10k buyin($1k), if dave wins $100k, then patri would get $10k, and vice versa. It is a good way to lower variance. However, it assumes that both have an equal expected return. Patri made things much more interesting by offering to make non-par swaps with other players playing in the main event. So he might only offer %10 of his winnings for %5 of dave’s or some other agreed upon rate. This means you can figure out what someone else thinks of your play. If Patri offered his own %10 for Dave’s %5, then you could deduce that Patri thinks he is 1/2 as good as Dave. Makes things very interesting.
Dave told me that he’s bought a piece of of Bill Chen(and some other guy who he doesn’t know, but trusts Bill to know). Bill said that he was selling some of his winnings, but after a large amount of interest from people who wanted to invest in him, he decided to limit the amount he sold. This is a perfect opportunity for another secondary market in a limited supply of player shares. Dave thinks he could already resell the share he owns of Bill for a profit.
Someone want to create a derivatives market for individual players?