View Poll Results: See OP: Which do you choose?

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  • -10% pay reduction for everyone

    28 84.85%
  • -10% of your department will be laid off.

    5 15.15%
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Thread: Lay-offs or pay cuts?

  1. #21
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    Re: Lay-offs or pay cuts?

    Quote Originally Posted by Tucker Case View Post
    Since you said "I'm confident that I can find employment fairly easily, regardless of how bad the economy is." the assumption must be that there aren't systemic economic difficulties affecting other firms as well, otherwise your confidence is entirely misplaced.
    Not necessarily. I'm confident I can find a job in any economic climate due to my skills and connections...but that doesn't mean I can make an employer overpay for my services. If the market just tanked and my job is worth 10% less than it previously was, that's the wage I'm probably going to have to settle for whether I stay at my current employer or not.

    Quote Originally Posted by Tucker Case
    Also, if you retain the job at the paycut, you have the luxury of looking for another job and holding out until you get one that pays the old scale or higher.

    There's probably more than a 10% chance of pulling that off unless you currently work for one of the firms that have payscales in the top 10%.
    The same could be said about any job though. There's always another job somewhere else that pays better. That's true whether I get a pay cut or not.

    Quote Originally Posted by Tucker Case
    OK, let me phrase the same question differently. Let's say we're playing two handed poker. I put up $100 and you put up $1,000. You have a 90% chance of winning my one hundred dollars and a 10% chance of losing your thousand. We keep playing this way until I decide to stop.
    No, as that would be -EV for me. 90% of the time I get $100. 10% of the time I lose $1,000.

    (.9)($100) + (.1)(-$1000) = -$10

    On average I'm losing $10 every time I play this game. What does this have to do with the thread though?

    Quote Originally Posted by Tucker Case
    Where is that number coming from, just curious.
    According to your numbers, a layoff would cost me somewhere between $1282 to $2564. But if I vote for the layoff, I'm only being laid off myself about 10% of the time. The other 90% of the time, it costs me nothing. So my expected loss is only:

    (.1)(-$1282 to -$2564) + (.9)($0) = $128 to $256 on average
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  2. #22
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    Re: Lay-offs or pay cuts?

    Quote Originally Posted by rathi View Post
    How do layoffs increase production?
    I was not describing production, only productivity. None the less I will explain in a little more detail.

    First we have to establish diminishing marginal product of capital. For the sake of simplicity, lets assume the stock of capital at a specific firm is constant in the short run. The more labor you add, the less alloted capital (Per worker) is availble to the specific firm. Y=f(L^x,K^y) : y+x<1 ; Assuming the capital stock is 10 and the labor force is 100, and the total factor productivity for labor is .4 and the total factor productivity for capital (K) is .5, the equation sets up as :Y=f(100^.4,10^.5) Y= about 20. Now let us assume a 10% cut in labor. Y=f(90^.4,10^.5) Y= 19.129. The change in output (.821) /new total output(19.129) = .0429 So, a change in 10 percent of labor has led to a decrease in about 4.29%


    You might increase profitability, typically only in the short term, but you generally can't get more revenue from less people.
    They are not laying people off to increase revenue levels. Remember, I was describing productivity, not total production. While production was decreased, the premise behind the layoff is expected decreases in customer demand. Keep in mind; this was a very crude and simplistic model for production and factor productivity.
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  3. #23
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    Re: Lay-offs or pay cuts?

    Quote Originally Posted by Kandahar View Post
    The same could be said about any job though. There's always another job somewhere else that pays better. That's true whether I get a pay cut or not.
    Exactly. Since you said that your confidence in finding another job is the qualifier on why you'd make the gamble of risking the layoff, and the above fact is true regardless of whether you get a pay cut or not, the smartest option is to take 90% in the interim instead of risking 100% in order to not have to look for one of those jobs and maintain the status quo.


    On average I'm losing $10 every time I play this game.
    My point is that it is a stupid bet because you will always come away losing over time. Actually, you break even over time.

    It's always stupid to take a bet where you risk way more in each single instance than what you can gain when the ultimate best case scenario is breaking even.

    Instead take the position that has no risk, because over time, there is no gain to be had in the other position.



    According to your numbers, a layoff would cost me somewhere between $1282 to $2564. But if I vote for the layoff, I'm only being laid off myself about 10% of the time. The other 90% of the time, it costs me nothing. So my expected loss is only:

    (.1)(-$1282 to -$2564) + (.9)($0) = $128 to $256 on average
    No, if you fall into the 10% your expected loss is 100%. If you fall into the 90% our expected loss is 0%.

    In the alternative situation, you are in the 100% with a guaranteed loss of 10%.

    In each scenario, the long term results of repeating the gamble over and over again are a loss of 10%.

    Thus, taking any risk at all for what over time equals the same situation isn't worth it. Let alone risking everything on it.

    And since you have no control over when you'd get hired again, and at what pay scale you get hired at, your risking everything and then some.

    If the ultimate result is that you end up with a job that pays 85% of what you made before the bet, you've got continuing losses on top of the short term losses.

    Whereas you can always look for another job that pays more than what you will make with the pay cut while taking no risk at all.

    The risk/reward equation means that this would always be a stupid bet except in scenarios where a 10% loss means your are totally screwed.

    That's because it adds a "risk" value to the paycut that is equal to the risk value for the layoff. It also removes the reward side of the paycut scenario entirely (reward = guaranteed job) since the guaranteed job itself just means you are totally screwed with a job instead of being totally screwed without one.

    This also adds to the reward side of the layoff scenario (reward = not being totally screwed).

    In that case, the equation turns from high risk-low reward (for all people who wouldn't be totally screwed by a 10% paycut) to low risk-high reward (for those who would be totally screed by the pay cut).

    Low risk-high reward bets = good. High risk-low reward bets = bad.



    When you made your claim about risking the layoff, you were trying to alter your "risk" side of the equation with another bet of your own invention: the bet that you'll find employment quickly.

    Using a secondary bet (of unknown odds) to justify taking on a high-risk primary bet with little to no reward is always the stupid move.

    It does not actually decrease the risk. It is only an irrational justification for taking a bad bet to begin with.
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  4. #24
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    Re: Lay-offs or pay cuts?

    Quote Originally Posted by Tucker Case View Post
    Exactly. Since you said that your confidence in finding another job is the qualifier on why you'd make the gamble of risking the layoff, and the above fact is true regardless of whether you get a pay cut or not, the smartest option is to take 90% in the interim instead of risking 100% in order to not have to look for one of those jobs and maintain the status quo.
    But if I'm confident I can find another job quickly and the pay cut will affect everyone, it can definitely be worth the risk.

    Quote Originally Posted by Tucker Case
    It's always stupid to take a bet where you risk way more in each single instance than what you can gain when the ultimate best case scenario is breaking even.
    I agree. But I don't know where you're getting the assumption that breaking even is the best I can do by risking a layoff instead of taking the pay cut.

    Quote Originally Posted by Tucker Case
    No, if you fall into the 10% your expected loss is 100%. If you fall into the 90% our expected loss is 0%.

    In the alternative situation, you are in the 100% with a guaranteed loss of 10%.

    In each scenario, the long term results of repeating the gamble over and over again are a loss of 10%.
    This isn't the correct way to look at it. You can't look at expected loss as a percentage instead of a dollar amount in this case. This isn't poker where you can compare each individual hand. It depends how long I'm laid off, how long my salary is reduced, etc.

    Quote Originally Posted by Tucker Case
    And since you have no control over when you'd get hired again, and at what pay scale you get hired at, your risking everything and then some.
    This seems like quite an assumption. I have a great deal of control over when I will get hired again. I have comparatively less control over what pay scale I get hired at, but it seems reasonable to me that I could get hired at a job that pays a similar wage to what I'd be earning if I accepted the pay cut.

    Quote Originally Posted by Tucker Case
    If the ultimate result is that you end up with a job that pays 85% of what you made before the bet, you've got continuing losses on top of the short term losses.
    You seem to be operating under some assumptions that I don't think I agree with, so let me lay out the assumptions I'm making.

    1. Suppose I'm currently earning $1,000 per week to make the math simple.

    2. I could take a salary cut and earn $900 with 100% certainty. If I choose this option, my expected loss is $100 per week, until I find a better job or until the pay cut ends.

    3. I could risk a layoff. Assuming your numbers about DC's unemployment benefits are correct, I would earn $359 per week 10% of the time, and $1000 per week 90% of the time. If I choose this option, my expected loss is $64 per week, until I find another job.

    ...So starting off (before we even look at any other variables), the layoff is better than the pay cut, from a purely EV standpoint. But there are some other assumptions that make the layoff even MORE desirable relative to the pay cut.

    4. I could find another job more quickly if I was laid off than if I took a salary cut. I would have more time and I would be more motivated. Additionally, I'm assuming that I could find a job of comparable pay REGARDLESS of whether I sought it out because I was laid off or because my salary was cut (i.e. the pool of jobs available to me would be the same in either case).


    So all things considered, I'd much rather risk the layoff. My expected weekly loss is lower, and I could reasonably expect that it would last for fewer weeks than the pay cut. If it took me 4 weeks to find a job if I was laid off, and 8 weeks to find a job if I took the pay cut, my total expected loss would be $256 with the layoff and $800 with the pay cut.

    Of course, as you mentioned the level of risk is important. Maybe some people in that situation would be more conservative and would prefer the low-risk / low-reward pay cut. But I'm in my 20s, don't have a family, and have enough resources that I could survive a layoff if necessary. So in my case, I'd definitely prefer to risk the layoff. The expected value is FAR better.
    Last edited by Kandahar; 03-27-10 at 07:17 PM.
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    Re: Lay-offs or pay cuts?

    Quote Originally Posted by Kandahar View Post
    3. I could risk a layoff. Assuming your numbers about DC's unemployment benefits are correct, I would earn $359 per week 10% of the time, and $1000 per week 90% of the time. If I choose this option, my expected loss is $64 per week, until I find another job.

    ...So starting off (before we even look at any other variables), the layoff is better than the pay cut, from a purely EV standpoint. But there are some other assumptions that make the layoff even MORE desirable relative to the pay cut.
    this is the assumption that makes no sense. The number you provide doesn't exist in reality. Your expected loss is either 0 or $641 per week. It's not 10% of the layoff total.

    The part I've put in bold is just silly. It makes no sense whatsoever. When you put the "until I find another job" in there, it is always in cases where you HAVE received the layoff. Then your guaranteed losses are $641 per week. It could be up to $1000 per week while you are trying to get unemployment. If you do get the job quickly, you might not get the unemployment. If it takes two weeks to find another job, your guaranteed losses are $2000.

    When you say you can find a job more quickly if you are laid off, that's not necessarily true. You are making a gamble that you'll find a job quickly in the first place.

    As you've pointed out, if the situation means a systemic decline in the industry, that is an asinine assumption to make. The other firms may also be laying people off and there will be a glut of people applying for the same jobs as you are.

    It's a terrible assumption to make because you are basing your risk assesment on the BEST case scenario instead of the WORST case scenario in an economy where the worst case scenario is the more likely one.

    But as you've also said:

    "It depends how long I'm laid off, how long my salary is reduced, etc."

    I worked out the numbers earlier. If you are only off for two weeks, and thus don't end up getting unemployment, you lose $2000. That's just two weeks. And you won't know how much you are making and have no control over it.

    Which means that comparatively, taking the layoff gives you 20 weeks to find a specific job that pays more than you make at the reduced pay, preferably back at your original level

    20 weeks. About 5 months. And that breaks you even from a two week layoff, but gives you a better final result (a job that pays the old wage). You maintain control over what job you eventually accept, guaranteeing that the only type of job you will accept pays more than what you will be making at reduced income and preferably as much or more than what you made before the cut.

    And you'll have 18 more weeks to take care of it.

    Since you are operating under the assumption that you'd find work quickly in the worst case scenario, you should be able to find a better paying gig in five months. You are in such high demand that you are willing to put it all on the line based on how quickly you'll be able to find a job while unemployed. If you can't find a better paying gig in 5 months of looking, then that assumption must be pure mythology, which makes risking the layoff an even greater risk.
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  6. #26
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    Re: Lay-offs or pay cuts?

    Quote Originally Posted by Tucker Case View Post
    this is the assumption that makes no sense. The number you provide doesn't exist in reality. Your expected loss is either 0 or $641 per week. It's not 10% of the layoff total.
    Expected value is calculated by taking the weighted average of all the possibilities. (90%)($1000) + (10%)($359) = $936. A loss of $64 per week on average. Of course I'll never lose exactly $64, but knowing your expected value is absolutely necessary to assessing the risk/reward tradeoff.

    Quote Originally Posted by Tucker Case
    The part I've put in bold is just silly. It makes no sense whatsoever. When you put the "until I find another job" in there, it is always in cases where you HAVE received the layoff. Then your guaranteed losses are $641 per week.
    It doesn't matter. It works the same way even if I'm in the 90% who don't get laid off. There's a 10% chance that I'll collect $359 for a few weeks, and there's a 90% chance that I'll collect $1000 over that same time period. At the end of that time period, the two scenarios will be the same (or nearly the same) and so this time period is the only one we need to worry about.

    I understand that there's more risk involved with chancing the layoff, as my loss COULD be $641 per week. That's why, as I said, some people might prefer to be conservative and take the low risk / low reward option of the pay cut instead. But risking the layoff is better EV.

    Quote Originally Posted by Tucker Case
    It could be up to $1000 per week while you are trying to get unemployment. If you do get the job quickly, you might not get the unemployment. If it takes two weeks to find another job, your guaranteed losses are $2000.
    Admittedly I'm not entirely clear on how unemployment laws work. So I'd be earning $0 for the first two weeks and $359 thereafter? OK. Let's stick with the assumption that it takes me four weeks to find a job.

    10% of the time I'll be earning $180 per week (on average) over that four-week span, and 90% of the time I'll be earning $1000 per week over that four-week span. In that case, my expected loss is $82 per week. Worse than before, but still better EV than the pay cut.

    Quote Originally Posted by Tucker Case
    When you say you can find a job more quickly if you are laid off, that's not necessarily true. You are making a gamble that you'll find a job quickly in the first place.
    Well presumably the same pool of jobs would be available to me whether I take a pay cut or get laid off. The only variable is the amount of time I'm able to spend searching for one of them, and my level of motivation. Presumably these variables would be higher if I was laid off as opposed to the pay cut.

    Quote Originally Posted by Tucker Case
    As you've pointed out, if the situation means a systemic decline in the industry, that is an asinine assumption to make. The other firms may also be laying people off and there will be a glut of people applying for the same jobs as you are.
    But that is true of the pay cut situation as well.

    Quote Originally Posted by Tucker Case
    It's a terrible assumption to make because you are basing your risk assesment on the BEST case scenario instead of the WORST case scenario in an economy where the worst case scenario is the more likely one.
    No, I'm basing my assessment on the AVERAGE case scenario, which is why I did expected value calculations. You seem to be assuming that a 10% risk of being laid off is the same as a 100% guarantee of being laid off. It is not.

    Quote Originally Posted by Tucker Case
    But as you've also said:

    "It depends how long I'm laid off, how long my salary is reduced, etc."

    I worked out the numbers earlier. If you are only off for two weeks, and thus don't end up getting unemployment, you lose $2000. That's just two weeks. And you won't know how much you are making and have no control over it.
    OK, so if we assume I'll find a job after two weeks: I earn $0 per week 10% of the time, and $1000 per week 90% of the time. My expected value is $900 per week over that time span, which is the same as the pay cut. So even here, the EV of the layoff is no *worse* than the pay cut, although the risk is higher.

    Quote Originally Posted by Tucker Case
    Which means that comparatively, taking the layoff gives you 20 weeks to find a specific job that pays more than you make at the reduced pay, preferably back at your original level

    20 weeks. About 5 months. And that breaks you even from a two week layoff, but gives you a better final result (a job that pays the old wage).
    What's the 20 weeks? Is that how long unemployment benefits pay out? I think it's safe to assume that that wouldn't be a factor...at least for me.

    Quote Originally Posted by Tucker Case
    You maintain control over what job you eventually accept, guaranteeing that the only type of job you will accept pays more than what you will be making at reduced income and preferably as much or more than what you made before the cut.

    And you'll have 18 more weeks to take care of it.

    Since you are operating under the assumption that you'd find work quickly in the worst case scenario, you should be able to find a better paying gig in five months. You are in such high demand that you are willing to put it all on the line based on how quickly you'll be able to find a job while unemployed. If you can't find a better paying gig in 5 months of looking, then that assumption must be pure mythology, which makes risking the layoff an even greater risk.
    Right, I am making that assumption. I figure 4 weeks is a reasonable, relatively conservative guess for how long it would take me to find employment if I was laid off. It would probably be less than that. Maybe 8 weeks in the worst case scenario. But regardless of the length of time it takes (which would depend on market factors), I think it's also reasonable to assume that it would take me twice as long to find a new job if I took the pay cut than if I was laid off.

    The expected value of the layoff is better than the expected value of the pay cut (except in your worst-case assumption where the two are the same), but the risk is higher. So it just comes down to whether or not you're willing to accept higher risk for a higher reward. As a single 20-something with enough money saved up, I am willing to do so. Maybe other people aren't. (It's the same reason I primarily invest in stocks instead of bonds/CDs).
    Last edited by Kandahar; 03-28-10 at 04:00 PM.
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    Re: Lay-offs or pay cuts?

    I just saw this thread. I would say pay cuts would be better, and I would go so far as to say that those paycuts should be progressive - that is, those who earn a higher salary should take more of a paycut than those who earn a smaller amount. However, I would try to make up for that by giving those who earn a larger amount some kind of stock options so they are better invested in the productivity of the company.

  8. #28
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    Re: Lay-offs or pay cuts?

    Quote Originally Posted by Kandahar View Post
    Well presumably the same pool of jobs would be available to me whether I take a pay cut or get laid off. The only variable is the amount of time I'm able to spend searching for one of them, and my level of motivation. Presumably these variables would be higher if I was laid off as opposed to the pay cut.
    Another variable you are excluding is the depletion of your savings and teh unknowns of finding a job in a situation where the income has disappeared. You are gambling on a gamble that you can get a job quickly.



    But that is true of the pay cut situation as well.
    Yes, but there's 0 risk in the pay cut situation.



    No, I'm basing my assessment on the AVERAGE case scenario, which is why I did expected value calculations. You seem to be assuming that a 10% risk of being laid off is the same as a 100% guarantee of being laid off. It is not.
    No, I'm looking at the gamble from the perspective of a good gambler.

    when I calculate the risk side of the equation, I don't artificially lower that by factoring in the reward side. They are kept separate.

    The reward side of the equation is the 90% of the time you save that 10% of your pay. Done. Nothing else to do here.

    The risk side of the equation is the 10% of the time you lose it all chasing that low reward.

    You are ****ing up the risk side of your equation by taking the average. You aren't risking the average, you are risking it all. It only happens ten percent of the time, but the reason you keep the risk and reward sides separate is so that you can have a good idea of what it being risked and what the legitimate expected reward is.

    The reward in this case is minimal when compared to the risk.


    OK, so if we assume I'll find a job after two weeks: I earn $0 per week 10% of the time, and $1000 per week 90% of the time. My expected value is $900 per week over that time span, which is the same as the pay cut. So even here, the EV of the layoff is no *worse* than the pay cut, although the risk is higher.
    You wouldn't be looking for a job in the 90% situation. That's the time you win. What do you win? Not having to look for a job. That's the reward side of the equation, and doesn't factor into the risk side of the equation.


    What's the 20 weeks? Is that how long unemployment benefits pay out? I think it's safe to assume that that wouldn't be a factor...at least for me.
    No, the 20 weeks is the amount of time in a pay cut scenario that equals your first two weeks of losses in the lay off situation.

    If you do end up in the unlucky 10%, you will lose $2000 in two weeks. That's assuming an absurdly lucky job search period of only two weeks.

    If you take the pay cut, it will take 20 weeks before you lose $2,000.




    Right, I am making that assumption. I figure 4 weeks is a reasonable, relatively conservative guess for how long it would take me to find employment if I was laid off. It would probably be less than that. Maybe 8 weeks in the worst case scenario. But regardless of the length of time it takes (which would depend on market factors), I think it's also reasonable to assume that it would take me twice as long to find a new job if I took the pay cut than if I was laid off.
    OK, then using your "conservative" estimates.

    Let's say it take 4 weeks to find a job with the layoff and 8 weeks to do it with the pay cut.

    Let's also say you get the unemployment, and only lose $641 dollars a week in the layoff scenario.

    This means that if you do get laid off, you will lose $2,564 over those 4 weeks.

    Let's say you take the pay cut. In 8 weeks you will lose $800. Reward in this situation = $7,200 salary over those 8 weeks, no risk of losing everything

    If you win the gamble, you don't lose that $800. Reward in this situation is $8,000 over those 8 weeks, but has a risk of losing everything.

    Personally, I totally disagree with your assessment that it would take only 4 weeks to find a job. I actually think it's an absurd expectation. The national average right now is 4-7 months. http://economy.freedomblogging.com/f...job-survey.pdf

    But even using your absurdly optimistic (unrealistic?) estimate that you'd find a job in 4 weeks, you would be putting a minimum of $2564-$4000 on the line for the chance to not lose $800.

    If you take the 4-7 month average, you are looking at about 16-28 weeks on unemployment.

    In we use the national average as our guide, the amount you can lose in the layoff while getting unemployment is $10,256-$17,948.

    If you take the layoff, you will lose between $1600-$2,800 over the same time span, but you will be making between $14,400-$25,200 over that time. Assuming it takes twice as long to get a new job this way, you will lose $3,200-$5,600 over that time.

    If your gamble pans out, and you don't lose your job, you will make between $16,000 and $28,000 over that time.

    Now, what needs to be factored in using the national averages is how well your bankroll can take about a $14,000-$18,000 hit over the next 4-7 months.

    Is it worth that kind of risk for the relatively minimal gains (actually it's not really gains because it is merely a lack of losses) of $1,600-$2,800 over that same span?

    Another mitigating factor is that you can make up that $100 a week fairly easily. I personally make more than that for 5 or 6 hours of work on Saturday nights as a doorman at a bar.




    The expected value of the layoff is better than the expected value of the pay cut (except in your worst-case assumption where the two are the same), but the risk is higher. So it just comes down to whether or not you're willing to accept higher risk for a higher reward. As a single 20-something with enough money saved up, I am willing to do so. Maybe other people aren't. (It's the same reason I primarily invest in stocks instead of bonds/CDs).
    Except it's not actually a higher reward. It's a lack of loss, and a relatively small one at that.

    And the quantities being risked are much greater than the reward being offered.

    An this is not really comparable to investing, because you don't go all-in on investments. It's gambling, pure and simple. You are betting your entire guaranteed income on an outcome that offers little to no reward.

    I'm not someone who takes the safe route. The money I make from the bar is parlayed into my poker fund which yields me pretty high returns on a very high risk investment.

    It's making smart bets that keeps me profitable in poker. I only take the high-risk bets when there is an equally high reward. I don't chase. I accept losses when it makes more sense to accept them.

    The situation being described here does not fit into that category. Primarily because there isn't an e2qually high reward comparable to the risk involved.

    Even though statistically it is a break even scenario, it's not a bet worth chasing because it offers little profit. The gamble is not worth the meager reward.

    Interestingly enough, the reverse scenario is a good example of a smart high risk bet.

    Risking $100 on a 10% chance to win $900 is a smart bet. Sure, you will lose 90% of the time, making it very high risk, but over the long haul, making the same bet over and over again, you'll break even.

    When it does hit, however, you have a very high reward proportional to the risk involved.

    It's not just a matter of odds of winning. It's also a matter of what is being put on the line and what one can expect to win in the best case scenario. Not to mention pot odds (i.e. if the bet is repeated over and over, will it lose, win or break even?).

    If the best I can expect from a bet is that I won't lose 10% of my stack, I'm not going to do something stupid like putting all of my money on the line to protect that 10%.

    The scenario described works out mathematically almost exactly like a two-handed game of Hold 'em with a board full of clubs that look like the following: A,K,Q,J,8 (again, all clubs)

    I have two non-clubs in my hand, making it so the best I can expect out of the hand is a split-pot. Statistically speaking, I have about a 91.2% chance that it will be a split pot. (i.e. there is an 8.8% chance that my opponent has the 9 or 10 of clubs)

    There are 200 chips in the pot, and I put 100 of them in there. I have 900 left in my stack. My opponent raises me all-in.

    I know that I have about a 90% shot of splitting that pot and getting my 100 back. But I have to risk everything I have for that 100.

    If he actually has the 9 or 10, I lose it all.

    Sure he might be bluffing, but I have no chance of winning the pot. Only getting my 100 back. It's not worth risking everything for such a ****ty return. It's absolutely stupid to chase that 100. Every time. If I had a chance of winning the whole pot including his bets, then it becomes a different story.

    If we replace the 8 on the board with a 2 of clubs, and I have the 8 of clubs in my hand, then I've got a 90% chance of winning the pot and I still have about a 10% chance of losing. Then the 10% chance of losing is mitigated by the actual chance for a reward.

    You don't gamble it all on the chance for a split pot. That's stupid.
    Tucker Case - Tard magnet.

  9. #29
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    Re: Lay-offs or pay cuts?

    Quote Originally Posted by Goobieman View Post
    Not necessarily. You can still have the same number of hours.
    Most firms produce something. If there isn't enough demand, then they have to decrease the total amount of hours. It actually cost money to keep open and produce unwanted products.

    For the society I think the better option is to lay off people, because some industries don't have a future and the demand will not increase after the crisis. It would have been much better if some lost their jobs and can move to another industry. If not, then some people will find that their pay won't increase after the crisis, neither their hours and it would have been much better for them and the society if they worked somewhere else.

    However, if we get mass unemployment and in industried that do have a future, then I could see the point of doing that in some industries. However, in practical politics it would make the ones layed off mad, because their industries are not protected.

  10. #30
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    Re: Lay-offs or pay cuts?

    Quote Originally Posted by Goobieman View Post
    Let's say that you work in a department within a company. Your department has 100 employees, all of whom make about the same wage.

    Management informs your department that it needs to cut your overall payroll by 10%, and offers you, collectively, the choice:

    -10% pay reduction for everyone
    -10% of your department will be laid off.

    The chance of you being laid off is the same as everyone else's

    Which do you choose?
    Please explain your answer
    To the choice, I would pick 10% chance of beeing laid off. If I get laid off, then I can do something else, like taking a master degree in my profession at university or just do something else for a while. Money is not really a problem, because I save money. If I don't get laid off, then I can keep my wage and my job will be secure after the crisis.

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