# Another proposal to merge CORR & MMC: A Dynamic Payout Scheme

**URL:** https://forum.numer.ai/t/another-proposal-to-merge-corr-mmc-a-dynamic-payout-scheme/630
**Category:** Tournament
**Created:** [July 7, 2020, 8:18pm UTC](https://forum.numer.ai/t/another-proposal-to-merge-corr-mmc-a-dynamic-payout-scheme/630 "2020-07-07T20:18:56Z")
**Posts on this page:** 2
**Page:** 1

<div class="post-metadata">

### Author: ![alfa137](https://avatars.discourse-cdn.com/v4/letter/a/54ee81/32.png) [@alfa137](https://forum.numer.ai/u/alfa137)
#### Post date: [July 7, 2020, 8:18pm UTC](https://forum.numer.ai/t/another-proposal-to-merge-corr-mmc-a-dynamic-payout-scheme/630/1 "2020-07-07T20:18:56Z")

</div>

**Motivation:**  
If models with MMC\>0 have Mean(CORR)=0.0318 and Mean(MMC)=0.015 and you demand models with high MMC, the multiplier of MMC should be at least twice the multiplier of CORR. That is to say:  
_Payout = w CORR + (2-w) MMC ; such that w\<0.667_  
Why? Because improving CORR by _+2d_ is easier than improving MMC by _+d_. This is in average terms, in marginal terms it can change a little bit.

**Proposal:**  
1.- Start with this initial scheme:  
_Payout = w CORR + (2-w) MMC ; such that w=0.65_  
2.- Adjust _“w”_ depending on the marginal improvement of the average CORR and MMC over time.  
3.- In this way the payout scheme can be changed for every tour in order to give an incentive to the submission of high MMC models.

---

<div class="post-metadata">

### Author: ![alfa137](https://avatars.discourse-cdn.com/v4/letter/a/54ee81/32.png) [@alfa137](https://forum.numer.ai/u/alfa137)
#### Post date: [July 8, 2020, 10:06am UTC](https://forum.numer.ai/t/another-proposal-to-merge-corr-mmc-a-dynamic-payout-scheme/630/2 "2020-07-08T10:06:52Z")

</div>

Here is an example:

Current situation:  
Mean(CORR) = 0.0318  
Mean(MMC) = 0.015  
In two months:  
Mean(CORR) = 0.0418  
Mean(MMC) = 0.0175  
Marginal values:  
Delta(CORR) = 0.0418 - 0.0318 = 0.01  
Delta(MMC) = 0-0175 - 0.015 = 0.0025  
New _“w”_:  
_w 0.01 = (2-w) 0.0025 =\> w = 0.4_

**An alternative** to avoid too much fluctuations or negative marginal values would be to consider **total value instead of marginal values** :

_w 0.0418 = (2-w) 0.0175 =\> w = 0.6_

In general, _w = 2/(1+Mean(CORR)/Mean(MMC))_  
with this particular cases:  
Mean(MMC) = 0 =\> w=0 =\> payout = 2 MMC ; the current MMC competition  
Mean(MMC)=Mean(CORR) =\> w=1 =\> payout = CORR + MMC ; the master\_key proposal  
Mean(CORR)=0 =\> w=2 =\> payout = 2 CORR ; all the incentive goes to CORR since mean=0