Expected value payment method and system for reducing the expected per unit costs of paying and/or receiving a given ammount of a commodity

Abstract

Disclosed is an Expected Value Payment Method for the purpose of reducing the expected per unit costs incurred in paying and/or receiving a given amount of a commodity. An Expected Value Payment Method uses a random number supplier to decide bets that can reduce expected per unit costs in two ways. First, expected per unit costs can be reduced for the payer and/or receiver of a commodity by giving the receiver a chance to win a greater amount of the commodity than a given amount, the greater amount having a lower per unit cost than the given amount which was originally to be paid and received. Second, a probabalistic sorting method and system is disclosed allowing businesses to offer customers who bet to win a given amount of a commodity a better expected price for that amount than the price offered to customers paying conventionally. Also disclosed are Expected Value Payment Execution Methods and Systems that make an Expected Value Payment Method practical in the marketplace and methods and systems for preventing cheating in expected value payment bets.

Claims

I claim:

1. A probabilistic method and system for sorting customers that includes a random number generator and means for registering customer identification information, for setting time periods when a customer is eligible to win, for setting the chances of winning, for operating the random number generator to determine whether customer has won, and for recording how many times a customer has engaged in the random selection process;

said method and system also comprising the following steps:

a. using said probability setting means to set a probability that a customer will be able to buy a commodity at a certain price, said probability represented by a fraction X/N, less than 1, where X and N are positive integers,

b. using said registration means to record a customer's identification information,

c. operating said random number generator to determine whether said customer has won the right to buy the commodity at said price, said random number generator selecting an integer from 1-N,

c1. if the integer selected is less than or equal to X then the customer wins,

c2. if not, the customer does not win,

d. using said registration means to record that said customer has engaged in said random selection process.

2. A probabilistic method and system for sorting customers that includes a random number generator and means for registering customer identification information, for setting time periods when a customer is eligible to win, for setting the chances of winning, for operating the random number generator to determine whether customer has won, and for recording how many times a customer has engaged in the random selection process;

said method and system also comprising the following steps:

a. using said probability setting means to set a probability that a customer will be able to buy a commodity at a certain price, said probability represented by a fraction X/N, less than 1, where X and N are positive integers,

b. using said registration means to record a customer's identification information,

c. using said time setting means to divide a period of time, T, into N units, where N is an integer, and operating said random number generator, said random number generator selecting an integer from 1-N,

d. awarding said customer the right to buy the commodity during the unit selected by the random number generator,

e. using said registration means to record that said customer has engaged in said random selection process.

Description

FIELD OF THE INVENTION

This invention relates to a new payment method and also to methods and systems that can make that method practical in the marketplace.

SUMMARY OF THE INVENTION

The object of the invention is to make practical an Expected Value Payment Method for reducing the expected per unit costs of paying and/or receiving a given amount of a commodity. An Expected Value Payment Method and System requires a Random Number Supplier (RNS) or the equivalent. Furthermore, it requires, in most cases, means and methods that prevent cheating in expected value payment bets. The invention thus includes those means and methods.

FIGURES

FIG. 1 shows a prototypical Expected Value Payment Execution System (EVPES).

FIG. 2 shows an EVPES that allows many useful values to be inputted, calculate and displayed.

FIG. 3 shows an EVPES incorporated into a cash register.

FIG. 4 shows and EVPES incorporated into a vending machine.

FIG. 5 shows an EVPES allowing purchases to be rounded, by betting, to the denomination of a customer's choice.

FIG. 6 shows an EVPES for eliminating change and that prevents cheating by allowing the combination of inputs.

FIG. 7 shows and EVPES incorporated into a cash register and that prevents cheating by insuring and a random number comes from an independent party.

FIG. 8 shows a schematic explanation of an expected value payment between two organizations using Verifiably Independently Determined Random Numbers.

FIG. 9 shows a lottery ticket check.

FIG. 10 shows an expected value payment made by electronic funds transfer where betting risk is transferred and the bet is executed by a central computer.

FIG. 11 shows an expected value payment made by electronic funds transfer where betting risk is transferred and the bet is executed by a bank computer.

FIG. 12 shows an expected value payment made by electronic funds transfer where betting risk is transferred using pre-paid debit cards.

FIG. 13 shows an EVPES incorporated into a toll plaza.

FIG. 14 shows an EVPES incorporated into a subway entry gate.

FIG. 15 shows an EVPES incorporated into a movie line.

FIG. 16 shows an anti-cheating system for an EVPES that combines inputs.

DESCRIPTION

Table of Contents

Expected Value Payment Method Explained

Expected Value Payment Method Applications

Expected Value Payment Execution Methods and Systems

Introduction to Methods and Systems For Preventing Cheating

Inspections

Combined Inputs

Verifiably Independently Determined Random Numbers

Expected Value Payment Method When Transferring Risk

Expected Value Payment Methods For Speeding Up Lines

Blum's Protocol

New Material, Various Subjects

Note on Terminology

In this application "embodiment" will be taken in its most general sense. Many embodiments will be described in this application. It is not fair to call one embodiment preferred because of the wide variety of situations where the invention can apply. There will be many specific illustrations of embodiments and these will be called "illustrations". They too are not intended to limit the scope of the inventor's claims in any way.

"Commodity" and "Payment" Defined

In this application "commodity" does not refer to all commodities but instead to those that are quantifiable and can be used as payment. Quantifiable services are included in the term. "Use as payment" means one party gives another party ownership of a commodity or rights to use a commodity.

Clearly, "payment" here does not refer just to the obvious case of payment with money because money is by no means the only commodity used as payment. The general concept of payment is seen in barter where both commodities in an exchange are payment. Money is an invention that has taken the place of one of the sides in a barter exchange. For example, if one buys a mug at a store, one pays the store say, $5.13, and the store pays one the mug. The mug is payment for the $5.13. Of course a payment does not have to be part of an exchange. One may make a payment and get nothing quantifiable in return, for example, when one pays taxes or gives a gift.

"Costs of Paying and/or Receiving a Commodity" Defined

In this application, the term "the costs of paying and/or receiving a commodity" is a very inclusive term which refers to the great variety of costs that can be incurred when a commodity is used as payment. The term is broad because costs vary greatly with the commodity and situation and differ for the Payer and the Receiver.

The most obvious cost is for the Receiver of a commodity when that commodity is bought by the Receiver. The obvious cost then for the Receiver is the amount of money it takes to buy the commodity (this cost is the only cost that the Receiver pays to the Payer). Other costs for the Receiver can be time costs. For example, when a store is receiving money, the store clerk requires time to handle the money. Information costs are another type of Receiver cost, for example, a party receiving stock might record that fact.

(A Receiver can pay for a commodity with a commodity other than money. This case is a barter exchange. Yet, in this application, for simplicity's sake, we will assume in exchanges that money is the second side of an exchange.)

The Payer's costs in this application DO NOT refer to the Payer's total costs tied up in a commodity. They do not, for example, refer to production costs. They refer only to the costs that are incurred in the paying of a commodity. To name a few, these costs can include the time spent making the payment, the overhead assigned to the payment and the costs of recording the payment.

Many costs of paying and receiving a commodity are hidden. For example, a stockholder receives money in the form of a dividend check. He or she does not see the cost the Payer incurred in writing the check.

"Per Unit Cost" (PUC) Defined

The per unit cost (PUC) of paying a given amount of a commodity is: the cost of paying the amount divided by the number of units in the amount. Likewise, the PUC of receiving a given amount of a commodity is: the cost of receiving the amount divided by the number of units in the amount. The trick is to decide what these costs include. There is no formula. For example, a person might receive 5 pens costing $10. The PUC of these pens is then $2. On the other hand, the Receiver can factor in other costs such as time costs, transportation costs, and opportunity costs. This would make the cost of receiving the 5 pens:

($10+time cost+transportation cost+opportunity cost)/5.

"Expected Value Payment Method" (EVPM) Defined

An Expected Value Payment Method (EVPM) is a method of payment whereby the Payer and Receiver of a commodity enter into a bet such that the Receiver may or may not receive the commodity depending on whether the Receiver wins the bet or not.

(This definition includes bets where a receiver can lose and still receive something. For example, if Bob makes a bet such that if he or wins he gets 15 pens and if he loses he gets 5 pens, the bet is really for 0 or 10 pens with 5being definitely received.)

Three values determine a bet:

WHAT CAN BE WON,

THE CHANCE OF WINNING,

THE COST PAID FOR HAVING THE CHANCE OF WINNING.

The average amount one will win, if one repeats a bet an infinite number of times, is called the Expected Value (EV) of the bet. It is calculated by multiplying WHAT CAN BE WON by THE CHANCE OF WINNING.

In an EVPM, the EV is set precisely.

And, in an EVPM, the bet is decided by a Random Number Supplier or the equivalent.

Scope of an EVPM

An EVPM can apply to payment situations where the commodity being paid is quantifiable and where the payment does not have to be made. For example, a bet can be made as to whether a person receives change back on a purchase or not but a bet cannot be made as to whether a person receives medicine or not.

An Expected Value Payment Method Used to Reduce The Expected Per Unit Costs (EPUC's) of Paying and/or Receiving a Given Amount of a Commodity

There are two ways that an EVPM can reduce expected per unit costs. The more general way will be described first.

An Expected Value Payment Method Used to Reduce The Expected Per Unit Costs of Paying and/or Receiving a Given Amount of a Commodity By Giving the Receiver a Chance to Win a Greater Amount of the Commodity Having a More Favorable Per Unit Cost Than The Given Amount Which the Receiver Was Originally to Receive

The per unit costs of paying and/or receiving a commodity vary with the amount of the commodity paid and received. The PUC's of a commodity are not always less as the amount of the commodity goes up (there is no general formula for PUC's of commodities). Still, with an EVPM we can take advantage of the fact that the PUC's of a commodity often are less at certain greater amounts than a given amount. The examples below demonstrate.

Items Bought In Wholesale vs. Retail Amounts

If a person buys, say, 5 pens at a time, the cost will usually be more per pen than if he or she buys 1000 pens at a time.

Money Paid by Many Small Checks vs. One Big Check

A company can pay a person $10 by sending that person ten $1 checks. However, it is cheaper per dollar (for both parties) to pay with one $10 check because there are costs involved in writing, cashing, recording and processing checks.

Stocks Bought in Odd Lots vs. 100 Share Lots

Stocks which are traded in amounts of less than 100 shares are called odd lots. Traders usually charge a premium to trade odd lots so it is cheaper, per unit of stock, to trade in even lots.

Money Paid by Coins (in the U.S.) vs. Bills

The costs for both customer and stores of handling coins are mainly time costs. It is less costly, per unit of currency, for both parties if cash purchases involve only bills.

The Goal of an EVPM

Assume one party is originally supposed to pay another party a given amount of a commodity. Call the two parties the Payer and the Receiver. Further call the given amount the Original Amount (OA). There is a certain PUC at the OA for both the Payer and Receiver.

Also assume the PUC is lower, for one or both of the parties, when a certain greater amount of the commodity is paid. Let us call this greater amount the Better Amount (BA). It would be better for the Payer and/or the Receiver if the Original Amount (OA) had the Per Unit Cost (PUC) of the Better Amount (BA). The goal of an EVPM is to convert the OA's PUC to the BA's PUC.

An EVPM can "convert" the Original Amount's Per Unit Cost to the Better Amount's Per Unit Cost

A bet can be set up between the two parties in a commodity payment such that:

The Receiver Can Win the BA

The Receiver's EV equals the OA

The Receiver's Cost for Having the Chance to Win the BA is set so that the Expected PUC for the Receiver equals the PUC of the BA.

The Payer's Expected PUC will also equal the PUC of the BA.)

In the case of exchanges, where the Receiver pays something to the Payer for the OA, it is often possible to set up a bet such that:

The Receiver's Cost Paid to the Payer For the Chance of Winning is equal to the Receiver's Cost Paid at the OA and

The Receiver's EV Is Set to an Amount, Greater than the OA, that makes the Expected PUC of that amount equal to the PUC of the BA.

(Again, the Payer's Expected PUC also equals the PUC of the BA.)

The examples below illustrate.

EXAMPLES

(Technically, the Expected PUC must include the cost of making a bet. For simplicity, we ignore this cost. Further, the Expected PUC should include taxes in certain cases. Taxes are also ignored for simplicity and because the law is unwritten on this subject.)

Purchasing Pens

Let us assume that a store can buy 50 pens from a distributor for $100. The store's PUC then is $2 per pen.

Let us further assume that the store can buy 500 pens for $500. The store's PUC for this amount is $1 per pen.

The store manager decides he would like to get pens at the $1 rate but he does not have $500 in his budget to spend on pens. Therefore, he feels the best investment is to enter into a bet with the distributor such that:

The store pays $100

The store can win 500 pens (which cost $500) and

The store's chance of winning is 1/5.

The store's EV then is 100 pens; hence the Expected PUC is $1 per pen.

Odd Lots of Stock

Let us assume that you want to buy 80 shares of a certain stock. You call your broker and he says, "If you buy 80 shares, the share price will be $1.60. I recommend you buy 100 shares instead. The price then will be 1.50 per share." You say, "But I've only got $128.00 to invest." The broker then says, "You can make the following bet:

You pay the $128.00

You can win the 100 shares (which cost $150.00) and

You have have a 128/150 chance of winning.

The expected number of shares you receive is 85 and 1/3 making the expected price per share $1.50"

Data-Base Time

Imagine that a student wants to do some research through a database. The database company's rates are: $30 per hour if one hour is used and $10 per hour if 5 hours are used. The student does not want to pay the $30 per hour rate but is willing to make a bet to try to get the $10 rate. The student must decide how much to pay to try to win and how many hours to try to win. Imagine then that a bet is set such that:

The student pays $20

The student can win 5 hours of data-base time (which cost $50)

The student's chance of winning is 2/5.

The student's EV is 2 hours; the Expected PUC is $10 per hour.

Tollbooth

Consider a tollbooth into which drivers pay $1 for a "pass through". The driver incurs a time cost for each pass through. There is also a time cost for the toll authority in handling the payments. In fact, the receiver in this case is not the driver, it is the toll authority and the commodity received is money and the unit is $1. This case is a good example of a large payer cost. It is important to note that while we can say that the PUC of a "pass through" is lowered, that is actually because the cost of paying $1 is lowered.

The per unit time costs would be reduced if only one out of, say, 20 drivers has to pay. This can happen if each driver makes a bet with the toll authority such that: The toll authority can win $20 from each driver, The toll authority's chance of winning is 1/20. (The toll authority pays for the chance to win by forgoing the $1 payment.) The toll authority's EV is $1 and each driver's expected payment is $1. Both parties save time since only one out of every twenty drivers must stop.

(This example is simplified of course because a different type of toll plaza should be constructed so that each driver can make a bet yet only stop if he or she loses.)

Dividend Check

Let us assume that General Motors is paying a stockholder a $0.25 dividend and paying this amount by check. Let us further assume that the cost of writing the check is $0.60. G.M.'s PUC (assuming $0.25 is one unit) is $0.60.

Now, if G.M. was paying a $25,000 dividend with a check, the cost of writing the check would still be $0.60 (we are assuming). Taking our unit to be $0.25, there are 100,000 units in the $25,000 dividend. Hence the PUC is $0.60/100,000.

Now, G.M. can make a bet with the dividend Receiver such that:

The dividend Receiver forgoes the $0.25 dividend,

The dividend Receiver then gets the chance to win $25,000 and

The dividend Receiver's chance of winning is 1/100,000.

The dividend Receiver's EV is $0.25 and G.M.'s expected payment is $0.25. But the point is that G.M.'s Expected total cost of paving the $0.25 dividend is 1/100,000.times.0.60 (the amount it takes to write the $25,000 check))=$0.000006, instead of the original $0.60.

Rounding Purchase Prices-Eliminating Coins

Consider a typical cash purchase at a store, a candy bar being bought for $0.40. In this case, the commodity being considered is money which is being paid in the form of coins. A bet can be setup such that:

The store can win a $1 bill from the customer

The store's chance of winning is 40/100.

The store's EV is $0.40. The customer's Expected Payment is $0.40.

A purchase is paid for with $1 or $0. Therefore, both parties save the time cost of dealing with coins.

Note: You can see that an EVPM can lower the EPUC of a commodity even when only a single unit of that commodity can be received. For example, one "pass through" is bought by betting with a toll authority for $20 instead of definitely paying $1. The EPUC of a "pass though" is lowered though nobody is betting for more than one "pass through". It seems this situation violates the principle of lowering the EPUC of a commodity by allowing the receiver the chance to win more of that commodity than is originally intended to be received. Yet the principle holds because the reason that the EPUC is lowered is that the commodity is paid for and the payment has a lower EPUC because of betting. Any reduction in EPUC of a commodity that is NOT bet for requires that the payment for that commodity IS bet for, the bet being for a larger payment than was originally intended.

Further Note: One way of setting up EVPM bets is not by deciding an amount to bet for but instead to set an odds multiplier (it need not be an integer multiplier) to apply to the original amount of a commodity intended to be paid. For example, McDonalds might want to have a lane where everybody has a b 1/10 chance of losing. Those who lose have to pay ten times their check.

Sometimes this application of an EVPM is more convenient, particularly in the case of lines. It still relies on the principle of betting to a greater amount of a commodity, it just makes it easier in certain situations to set that amount.

Hybrid Payments

Hybrid payments are those where part of the payment is made in the conventional way and part is made in the EV way. In a hybrid payment:

The Receiver definitely receives an amount, X, of a commodity.

The Receiver also pays for the chance to win an amount, Y.

X+Y=the BA. The OA is somewhere between X and Y.

If the Receiver wins the bet, he gets the BA (the winnings, Y, are added to X). If the Receiver loses, he gets X.

The Expected PUC of hybrid payments can be lower (but not necessarily) than the PUC of payments of the OA. The example below demonstrates.

Hybrid Purchase of Eggs

Say a person can buy 16 eggs for $1.60 cents, 10 cents each. Say further that the price of 24 eggs is $1.92, 8 cents each. And the price for 12 eggs is $1.32, 11 cents an egg. And say the person has $1.60 to spend. The person decides to definitely buy 12 eggs and bet his remaining money to try to win 12 more eggs. If he wins, he gets 24 eggs at $1.60. If he loses, he gets 12 eggs at $1.60. To make the bet, he must put up $1.32 to definitely buy the 12 eggs. He has 28 cents left over to bet.

A bet can be set such that:

He puts up the 28 cents

He can win 12 eggs and

His chances of winning are 28/60.

His EV then is, 28/5 eggs or 5.6 eggs. His total EV is 12+5.6 (17.6) eggs at a cost of $1.60, a little over 9 cents an egg. The store cannot complain because its expected revenue for the extra 12 eggs is 60 cents. The 60 cents is added to the $1.32 equalling $1.92, the amount the store charges for 24 eggs.

Transferring Expected Savings

When an EVPM is used, as illustrated in the examples above, one or both parties in a bet have an Expected PUC lower than the PUC of the OA. Hence, one or both parties has an Expected Savings.

It is possible for a party, call it the first party, to transfer all or part of its savings to the other party, up to the point that the first party's Expected PUC is no worse than its PUC at the OA. The bet between the parties can be set so that any percentage of one party's savings are transferred to the other party. The bet can be set that way by varying the three values that make up a bet: The Receiver's Chance of Winning, What the Receiver Can Win and, The Receiver's Cost For Having the Chance of Winning. The examples below illustrate.

Purchasing Pens Revisited

In the example used above where pens are hypothetically purchased by a store from a distributor, the store's original purchase is 50 pens for $100, a PUC of $2. By making a bet in which the store can win 500 pens with 1/5 chance of winning the pens and at a cost of $100, the store gets an EV of 100 pens for $100, $1 per pen. This represents a savings of 50 pens. The store can transfer this savings to the distributor by changing the odds on the bet such that:

The store pays $100,

The store can win 500 pens and

The store's chance of winning is 1/10 (instead of 1/5).

The store's EV is then 50 pens for which the store has paid $100 making the Expected PUC $2 per pen. The store has lost nothing relative to the original purchase while the distributor has an Expected Payment of 50 less pens.

Dividend Revisited

In the example of the dividend check, G.M.'s original payment was $0.25 plus the cost of making that payment, $0.60, a total of $0.85. By making a bet with the stockholder, G.M had an expected savings of $0.599994. This can be transferred if a bet is set up such that: The stockholder pays for the chance of winning by forgoing the $0.25 dividend The stockholder can win $84,999.40 (instead of $25,000) The stockholder's chance of winning is 1/100,000. The stockholders EV is $0.84.9994 cents. G.M.'s expected total payment is:

$84,999.40+$0.60 (the cost of writing the check).times.1/100,000=$0.85.

Rounding Purchases-Eliminating Coins Revisited

In this example, a customer buys a candy bar for 40 cents. Let us just focus on the time costs for the store in receiving payment. Assume that the time costs are quantified by the store at 10 cents for receiving the 40 cents. Let us further say that the store quantifies the time cost of receiving a $1 bill at 5 cents. The question then is what are the PUC's in each case. If, out of a 40 cent payment, 10 cents go into time costs, the store can really only say that it has received 30 cents at a cost of 10 cents. If, out of a $1 bill payment, 5 cents go into time costs, the store can only say that it has received 95 cents at a cost of 5 cents. Assume a unit is 1 cent. The PUC's in the first payment are 10/30 of a cent for each cent received and the PUC in the second are 5/95 of a cent for each cent received.

The store can then make a bet such that:

The store forgoes the 40 cent payment

The store can win a $1 bill

The store's chance of winning is 30/95 or equivalently (30+150/95)/100.

The customer's expected payment then is 30 and 150/95 cents instead of 40 cents. The stores EV is 30 units plus 150/95 units. The 150/95 units are actually the cost for the store of receiving the 30 units, which is the same PUC as at a payment of $1.

An EVPM Used By Businesses To Increase Revenue By Offering Betting Customers a Better Expected Price For a Commodity Than Is Offered to Conventionally Paying Customers

In certain situations, businesses can offer customers who bet to win an amount of a commodity a lower Expected PUC than customers who pay conventionally for that amount. In this case the EVPM does not lower Expected PUC's by giving Receivers the Chance to win an amount greater than a certain amount but instead by giving them the chance to win that certain amount itself.

Bettors can get a better Expected PUC because of the cost structure of certain businesses. Businesses that have low variable costs in particular-such as airlines, hotels, data-bases, T.V. stations and communications networks-can use an EVPM to offer bettors lower Expected PUC's. The businesses in return get greater revenue and therefore greater profits. The key to using an EVPM in this way is the ability of a business to segment customers according to those who are willing to bet and those who are not. If all customers could bet they all would and the business would get less revenue. But, in certain situations, businesses can profitably segregate customers. The example below illustrates.

Assume an airline charges $200 for a coach seat and $400 for a first class seat. The airline can give customers who purchase a coach seat the chance to bet to upgrade to a first class seat, if first class isn't full. The bet could be set up such that:

The customer pays $50

The customer can win a first class upgrade.

The customer's chance of winning is 1/2.

The customer's expected cost is $100. Hence, given that the customer has paid $200 for the coach seat and and expected cost of $100 for the upgrade, the total expected cost of the first class seat is $300.

The key for the airline is to stop passengers who would normally pay $400 for first class scats from buying coach seats and betting until they won a first class scat. The airline thus would have to limit the number of bets a coach passenger could make to upgrade.

Is an EVPM Legal in Places Where Gambling Is Illegal?

An EVPM should not be looked at as harmful gambling. It is a more efficient payment method in many situations. And it can be applied so that it does not expose people to damaging losses.

Further Discussion of the Scope of an EVPM

This application discloses that an EVPM is a very general method that can be used in numerous specific situations to lower expected per unit commodity costs. The question then arises, if someone else has come up with a given, specific use of an EVPM, has this person also thought of any other uses?. I think not. It is hard to say for sure what is an original, new use for an EVPM because we have no good theory of idea origination. Good ideas are usually obvious in retrospect but not in prospect.

The inventor will try to divide the general use of an EVPM into separate, still somewhat general uses which seem different from each other in that each seems to require a new leap of imagination to perceive. For example, the realization that General Motors can agglomerate its small dividend payments into one big payment to be won by one shareholder is clearly not the same as the realization that purchases at stores can be rounded fairly only by betting. And this realization is clearly not equal to the realization that all purchases can be "converted", by betting, into integer multiples of one denomination. These cases are different manifestations of a central idea, that betting for a certain amount of a commodity can often yield lower EPUC's than paying conventionally for a smaller amount. Yet, if one does not see the unifying idea, the manifestations are different ideas. Analogously, electricity and light were once thought to be very different things and are now known to be manifestations of the same fundamental force. The purpose of the discussion just below is to stake out the inventors priority and to better explain the uses of an EVPM.

1) An EVPM can take advantage of the cost structures of certain businesses to give betting customers lower PUC's than conventionally paying customers. This use is the most different from the other uses because the Receiver of a commodity is not betting to receive a greater amount of the commodity than was originally intended to be received.

2) An EVPM can be used to take advantage of the fact that sellers can offer lower per unit prices on certain commodities as certain greater amounts of those commodities are sold as is seen, for example, in the difference between wholesale and retail prices.

3) An EVPM can be used to group many small payments into one big payment that is dispensed as in a lottery.

4) An EVPM can be used by a Payer to reduce the number of payments needed to be made. For example, a company can have an agreement with certain other companies that any payment under $500 will be bet such that the company pays either $500 or $0.

5) An EVPM can be used by Receivers to reduce the number of payments received. For example, a magazine publisher can include means on its business reply cards for subscribers to bet as to whether they will pay for the subscription. If they win they pay nothing. If they lose, they agree to pay more. Likewise, in electronic funds transfers, the Receivers and the Payers of the funds can agree that a bet will take place if the amount to be transferred is under a certain amount. Such betting would reduce the overall traffic of electronic funds transfers. Depending on how this use of an EVPM is phrased, it may seem very similar to the use mentioned in #4, but the implementation is very different, pointing out that it also seems to be a different idea and therefore a different use.

6) An EVPM can be used to round purchase amounts to desired denominations.

7) An EVPM can be used to speed up the movement of lines where payments are made. Such lines can move more quickly if fewer payments have to be made.

8) An EVPM can be used to transfer betting risk from one party to another, thereby allowing bets for large amounts of a commodity to create greater efficiencies.

9) An EVPM can be used to simplify variety. Explained below is perhaps the best example.

A PROPOSAL FOR OCCAMING OUR CURRENCY

Occaming is a fake word created from the name of William of Occam, a philosopher who in the early thirteen hundreds said, "It is vain to do with more what can be done with fewer." This idea, called Ocx, am's Razor, is an important criterion for judging scientific theories. Its familiar form is, "Entities are not to be multiplied beyond necessity."

You may have considered the time people spend counting, carrying, storing and sorting the penny. If so, you probably realize that the penny is more trouble than it's worth and should be eliminated. But have you ever considered the possibility of really occaming our currency by replacing all our bills and coins with one bill or coin? That way people and businesses wouldn't have to spend so much time handling currency, an activity that costs society a great deal in total.

In fact, we can occam to one bill or coin, by adopting an Expected Value Payment Method (EVPM). With an EVPM we can hold the amount that a store (or any receiver of payment) can win constant at a given denomination, say, $20. Then we can vary the odds so that the store's expected value will equal the price of any item being bought, if that item is less than $20. Hence, all payments can be made in multiples of the denomination being used.

(In the case where an item is more than $20, say $85, a bet could be made for a multiple of $20, say $100. Or, the purchase price could be divided by $20 and the remainder would be bet for. For example, in the case of an $85 item, one would pay four twenties and bet to round up or down the remaining $5.)

If an EVPM was adopted universally, only one denomination would be needed. Stores would no longer make change. Store receipts could immediately go into drop safes. And, stores would not need a float meaning a country would have less money tied up in float leaving more to go to productive investment.

Obviously, it is possible to occam currency less and have more than one coin or bill. If a country has two denominations of currency, one big and one small, people who fear losing can bet small sums and not risk serious loss.

Expected Value Payment Execution Methods and Systems

This application discloses an Expected Value Payment Method (EVPM) using a Random Number Supplier (RNS), or the equivalent, to decide the outcome of bets for the purposes described in the preceding part of the application. An RNS is a device that upon some input generates a random number (RN), randomly selects an RN from a set of previously generated RN's or, supplies an independently generated and selected RN. An RNS can also be a device or method that combines inputs from parties in a bet to yield a number that is fair to both.

Also disclosed are Expected Value Payment Execution Methods and Systems (EVPEMS's) that make an EVPM practical in the marketplace. For simplicity, "EVPEMS" will be abbreviated by "Z".

Executing a Bet Defined

The term "executing a bet" covers more than one possible act. At minimum it requires supplying an RN for deciding a bet. It can also include setting the odds on a bet, the Bet Amount and who is to win the Bet Amount. It can also include other functions that aid the parties in a bet to set these and other values, particularly the EP. All the values for a bet can be set in the heads of the parties involved and even the RN can be arrived at by combining inputs that come from the minds of the parties involved so no device is actually necessary to execute a bet. The point is that "executing a bet" is not an exact definition and Z's will be described that carry out one or more functions for executing bets. A Z's functions may not be in a single device and may even be duplicated in an EV payment. Along with the mandatory RNS, register methods and systems for an EV payment may be used. Various possibilities are described below.

A) Minimum Z

At minimum a Z includes an RNS of a given range that allows people to decide a bet. The Z need not aid the execution of a bet in any other way. A system or device that aids in EVPM bets but does not include or is not connected to an RNS is an Expected Value Payment Register System (EVPRS). While the following discussion will refer to Z's, the comments will apply to EVPRS's as well where relevant.

An RNS can be variable to conveniently handle the odds on any bet. The RNS can thus randomly select from any required range of numbers. To be variable, the RNS requires means for inputting the range. The step of setting the odds would of course include setting the proper range for those odds.

A convenient RNS for an EVPM is one where the set of possible RN's is a consecutive set of integers starting at "1", with the number of integers being equal to the number of units in the amount of the commodity being bet for. For example, if a person bets whether or not to pay $1, the number of units in the amount is usually considered to be 100 (pennies).

B) Z's That Allow Inputting of the Chances of Winning and That Declare a Winner

This type of Z includes means for inputting the chances of winning a bet, means for supplying an RN (the RN need not be displayed), means for calculating whether the RN is a win or a loss for a party and, means for displaying or otherwise communicating a win or loss.

C) Z's That Allow Inputting of the Chances of Winning and the Amount That Can Be Won and That Declare a Winner

This type of Z requires the same means as "B" and in addition means for inputting and displaying the amount that can be won.

D) Z's That Include the Expected Value (Expected Payment)

In an EVPM, the expected value for the Receiver, we will call it the Expected Payment (EP), must be known. We have then three values that must be known in an EVPM: the EP, the odds, and the BA (Bet Amount or "Better Amount"). Given any pair of these values, the third can be calculated. In addition to having an RNS, a Z may allow one or more of these values to be inputted, pre-set, or calculated. There are 14 possible Z's depending on what values are inputtable, set or calculated. As soon as any two values have been established, the third is automatically calculated.

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    1 EP set      BA set       Odds set
    2 EP set      BA input     Odds input
    3 EP set      BA input     Odds calculated
    4 EP set      BA calculated
                               Odds input
    5 EP input    BA set       Odds input
    6 EP input    BA set       Odds calculated
    7 EP input    BA input     Odds set
    8 EP input    BA input     Odds input
    9 EP input    BA input     Odds calculated
    10 EP input   BA calculated
                               Odds set
    11 EP input   BA calculated
                               Odds input
    12 EP calculated
                  BA set       Odds input
    13 EP calculated
                  BA input     Odds set
    14 EP calculated
                  BA input     Odds input
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