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Cleobuddy's musings

A place for deep and slightly heretical poker thoughts...
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The dog days of winter are finally here. Cabin fever is setting in. We here are being pounded with snowstorm after snowstorm as we witness annual snowfall records being shattered with our sunlight depleted eyes, and this with six weeks of Winter still to go. What was I expecting? I wasn't expecting this, actually. I was hoping for something more normal, if not a bit better than normal. I figured that was a sensible outlook going into this Winter.  December had been incredibly mild and January had been very tame until things took a vicious turn for the worse. Now all bets are off.  Add to that the fact my snowblower is out of commission and you will better understand that I am feeling a bit victimized by Lady luck's old man---Old Man Winter.

As you have guessed, I'm going to be tying that into some poker related thoughts. The question of whether we are fair to ourselves with our expectations is often very relevant. Things often go awry in situations where we are subject to an equal chance of having things go our way or not. What do you expect will be the result? We get good and bad. In typical human nature, though, we remember the bad a lot more, and it can have an effect on our future decision making. There's a natural bias towards feeling we are victims. It helps to know that.

This very thing came out in a youtube video I was watching that was about bringing scientific curiosities to the masses (of all things). The short bit was about exposing the psychological bias we humans have towards avoiding risk and how it can be detrimental at times. The video was like a narrated scientific experiment that you or I are invited to look into. In it a series of individuals were approached and presented with a bet on a the flip of a coin. The narrator explained the rules to the subject: if you call heads and it turns out to be a head you win $10 from me; if it's a tail you give me $10.  Interestingly, no one showed took the bet. When asked about why they would not take the bet many, if not most, said that they were happy with their $10 in pocket and would rather not lose it.  "How about my $10?" the narrator quipped, "don't you value my $10?". For the most part the answer was that it wasn't really that important to them.

It turns out that this is pretty standard. Most people won't take that sort of bet. I don't blame them. If a stranger came up to me with a betting situation that was 50/50 and wanted action I would be suspicious that I was being set up for some trick aiming at getting my $10. I also suspect that might be the case with these people. But it isn't necessary to guess at this because it's the sort of thing that has been studied over and over in controlled experiments. People have different thresholds which must be surpassed before the potential gain of the bet becomes a decisive factor. When the narrator increased the odds of winning by putting $20 at risk against $10 there were still no takers. Why not? A few people expressed that it just wasn't enough to take the risk and that it was just one flip which made the payout odds irrelevant to them. Same thing happened all the way to $50. 5:1 is an interesting limit because it is the one that researchers have identified as the one around which things change. Those type of odds start to get people taking chances. Earlier, one individual had initially refused to bet because of stated moral issues around betting. That's fine; we' re all wired differently. What was interesting is that this individual started to change his opinion at that same level, hinting that even our cherished belief systems succumb to the temptation of certain favorable odds. (Should you value bet large? Maybe against novices) This was all very interesting to see. I never really thought much about this as it pertains to me, but I imagine I also have a certain level of basic risk aversion--we all do.

What really bowled me over was what happened when the narrator offered to do this bet over and over with people, say 100 times. That my friends is a whole other ball of wax. No longer can any argument based in the uncertainty of one flip (the high variance around one event) be used to inteligently decline. In fact, if you flip 100 times there is pretty good expected value for the outcome of the flips; it will lie around 50% and be within a few standard deviations of that most of the time. The result? It had no apparent bearing whatsoever. The same people declined the bets up to 5:1 odds in their favor. When asked about it they didn't really have an answer except that it didn't change anything--each flip was stil 50/50 some said. Some even said they risked losing more! Quick, start giving these people incentives to play poker!!!

Enter the concept of expected value. If you have read anything about poker you have come across it. In the game of chance I have presented to you there were initially 1:1 odds and the scenario had the most variance it can possbly have (one event, $20 or $0). Not taking that bet is a good thing to do if you value a bird in hand, so to speak. When the odds got better and were 5:1 played over 100 hands it is altogether quite different. Your win rate will be expected to fall around 50%. Roughly half the time you will win $50 and roughly half the time you will lose $10. Over 100 hands you are going to expect to win roughly (50times x$50 -50times x$10)=nice lunch money. The very average person questioned actually declined what is almost absolutely certain large gain because they were unaware of this concept. Talk about being blinded by risk. Again, it's also what experiment shows. I suspected that we might all have some sort of feel for this, but apparently we don't. Did I come to poker with this bias? I wonder now.

There are many of the "standard" plays in poker that revolve around this. Why do you raise when you have a good hand? It has everything to do with expected value. In the long term the best starting hands will deliver to you a winning percentage (above 50/50). Hauling in with even 1:1 betting odds becomes profitable.  Raising proportionally scales up the eventual payout. Why do we bet 3/4 of the pot or more to defend a made hand against a straight draw?  We do so to make the caller enter into negative Expected Value  territory. They should know better than that, but often don't at lower stakes. How about races in poker? You know, those offering 0.52:0.48 like pocket pairs againt overcards. Well, they can be equally useful if you can become good at pinpointing when you are going up against no better than two overcards (blind versus blind?). Set mining? Same principle. If you can get the right odds you must absolutely do it even if you know it will only pay you in the long run. It will pay you, though.

How about bluffing? It's a way to exploit risk aversion by telling a fictional story. How about fold equity? It's based in risk aversion too. How about getting a HUD? It's about better knowing the odds of certain things happening and your opponents past perfromance so you can tailor your strategy. What is a LAG? It's someone who feels he can use risk aversion against you in many situations. What is a TAG. He's someone who will use it against you in the best situations you can get. How about traps? Isn't that a clever opportunity? Why not omit to do the right EV play in order to get someone to keep playing and possibly hit his second best hand. Yup, it's that kind of thing you have to look out for.

So fellow practioners, my poker will now be much more oriented towards estimation of risk and estimation of risk aversion in my opponent. What I have become aware of to a greater degree is how much we need to know ourselves before we go to battle. I fear it can be the difference between being a very good low stakes cash game player and being a losing mid stakes player. That's true all the way up to the top levels.

In the rapid expansion phase of poker many new recruits obiously went to battle unaware they had such biases. It is only normal for this sort of thing to be less true now, for it is not until you have declined sure things over and over and have been exploited by +EV situations over and over that you will start to question it.  If I had to guess I would wager that people who are "naturals" are probably those who come with an innate calculating ability, that sense of what is a good long term bet, or those who can rapidly come to read others' risk aversion. It's not just in Poker either. Car salesmen are also said to be only as good as they can read you in a flash.

Do not forget to take the certain money when it is out there, because in times of heavy snowfall it can be very useful to repair snowblowers.

Avoid risk well,

Cleobuddy

 

 

 

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