A formula for figuring out how much you should bet to maximize the outcome.
Simplified formula:
O = (P * 2) - 1
Where O is the optimal wager size, P is the probability to win a game that pays out 1:1 (even money payoff where you gain what you bet if you win).
For example, with a game that has a 60% chance to win with an even money payoff, the optimal wager as a percentage of available funds is (0.6 * 2) - 1, or 20% of available funds.
See also:
- What would be optimal to bet when the odds are unknown i.e. the Ellsberg paradox?
- Game theory