Proof of a conjecture about Parrondo's paradox for two-armed slot machines

Abstract

The 1936 Mills Futurity slot machine had the feature that, if a player loses 10 times in a row, the 10 lost coins are returned. Ethier and Lee (2010) studied a generalized version of this machine, with 10 replaced by deterministic parameter J. They established the Parrondo effect for a hypothetical two-armed machine with the Futurity award. Specifically, arm A and arm B, played individually, are asymptotically fair, but when alternated randomly (the so-called random mixture strategy), the casino makes money in the long run. They also considered the nonrandom periodic pattern strategy for patterns with r As and s Bs (e.g., ABABB if r=2 and s=3). They established the Parrondo effect if r+s divides J, and conjectured it in four other situations, including the case J=2 with r≥1 and s≥1. We prove the conjecture in the latter case.