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Stochastic Processes // Game 02

Martingale Mutiny

A positive edge. A proportional storm. When do you drop anchor?

Your boat sets out with 100 in cargo, aiming for the island. Each leg of the crossing you either gain 8 on average (rougher water the further you go), or - with a small Poisson-arrival chance - a storm hits and halves everything in your hold. Sail on for more expected cargo, or drop anchor and bank what you've got.

EDGE+8 avg/leggrowing swell each leg
STORMλ = 0.1~10% chance/leg, halves your hold
ANCHORbank nowa valid stopping time - you'll have to predict first

Interview lens: a flat edge against a proportional loss doesn't compound forever. Before you can drop anchor, you'll have to estimate the recursion's expected value yourself - no live readout while you sail.