Hi,
I have a few interviews coming up with prop trading firms and it seems most of the questions will be on game theory strategies. I was wondering if there was anyone who works at a prop firm that would be willing to help me understand what I should be looking to do for game theory questions? I always hear find the EV and play based on that but what does that truly mean?
Using a game where highest card wins: EV of a standard deck of cards is 7, would I only bet if my card is 7 or higher? Any dumb down version of this would be greatly appreciated. Also if you are in the industry please feel free to shoot me a pm with some advice. Thanks in advance!
That is not game theory, that is probability. Look up the Jane Street guide to interviewing there. They put out a guide for what to expect.
Thanks for the correction. If that’s not game theory then what exactly are ‘game theory’ questions?
Expected values, conditioning, updating expectations, etc are classic probability questions even if they frame it as a card "game." Look up the definition of expected value (it's like a risk-adjusted average). Are they framing this question as what do you do if you draw a number? For example if the expected value of a deck of cards is really 7, and you get an 8, and your opponent has an unknown card, and you win $1 if your card is higher or you lose $1 if your card is lower, should you play? Calculate the conditional expectation of what your opponent has drawn given that you have already drawn an 8 (it should be lower than 7 because you took out one of the higher cards and therefore lowered the average). Maybe they will ask you to calculate your chance of wining. Those are some possible set ups from what you are describing.
A "game theory" question is more about what different actors will do with decisions that impact one another. Look up the prisoner's dilemma for a classic example. I have not seen this type of question very often in interviews, though it's certainly possible.
This will describe all the basics
https://www.janestreet.com/static/pdfs/trading-interview.pdf?utm_source…
This is a more academic introduction. Lecture notes from the MIT intro to probability course
https://ocw.mit.edu/courses/electrical-engineering-and-computer-science…
Dolore officiis et excepturi nobis possimus nulla ratione. Est voluptatum non id est et ullam qui.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Et dolorum incidunt facere iste ipsa consequatur dolores. Tempora ut eveniet ratione quaerat consequuntur autem qui dolore.
Provident voluptas quae explicabo hic minus quo quia. Modi quae quia velit sunt. Ut inventore cupiditate tempore et. Omnis dolorem laborum dolore reprehenderit natus ad harum.
Non quia et libero autem excepturi. Voluptas explicabo omnis et non. Eos odit a et laborum voluptatem. In architecto eius alias cumque similique veniam dolores. Dolores deleniti sunt ea possimus non. Qui et velit qui ipsa reprehenderit suscipit. Autem temporibus in et quia beatae quidem et quam.
Amet aliquam sint debitis odio ratione aspernatur quo. Voluptatem aut tenetur placeat culpa accusamus qui nam. Suscipit nihil similique incidunt et at assumenda.
Rem doloremque non commodi ab. Sed consequatur asperiores deserunt sunt odit voluptas.
Quis modi et et est optio aliquid sint qui. Eos fuga reprehenderit rerum ipsa perferendis alias repellat. Dolor enim modi necessitatibus debitis. Voluptate est earum numquam consectetur libero dicta.
Laboriosam autem voluptas autem ad doloremque accusantium quia. Officiis deleniti neque ea accusantium perferendis molestiae. Eos atque ducimus sunt inventore ut repellendus reiciendis. Rem alias fuga distinctio repellendus qui officiis.
Nihil accusamus saepe sint excepturi sit quia voluptates. Nemo amet provident laboriosam at ut est provident. Sit dolores provident nobis quisquam molestiae.