Wednesday, March 25, 2009

Errors in thinking = Errors at the ATM

Human beings (us) are the smartest creatures on the planet, I don’t care what you dolphin lover’s have to say. We have logic. (good for poker) We have reasoning. (good for poker) We have emotion. (ummm…)

Unfortunately our rational minds are often trumped by our emotions/wishful thinking/drunken state. Which leads us to the topic of today’s post: logical fallacies and how they can be applied to poker and gambling.

The Gambler’s Fallacy: This was an obvious choice to start off my list. It comes into play when you believe that your chances of winning increase with each consecutive loss. We want this to be true, but it isn’t. A coin that has landed on heads twenty times is a rarity, but it doesn’t make the chances of tails coming up next anymore than 50/50. Past occurrences can never change something with a fixed probability. In other words, throw out your roulette strategy.

Illusion of Control: This is a BIG one! It is overestimating the role of skill and underestimating the role of chance in a given game. I have known many players that attribute their wins to skill and their losses to bad luck. This is a very egotistical move of which even the TV players are guilty…I suppose that the fact they are on TV is what inflated their ego. Poker is, in part, a game of chance. You can only blame yourself and your opponent for a loss, and you can only adjust for yourself.

Going along with the illusion of control is hindsight bias. This is evaluating a decision as good or bad depending on whether it led to a win or a loss. Example: I made the right move in chasing the straight, it came! You may have been way behind for the bet that was asked of you, and if you were, it was a bad decision regardless of outcome.

Availability Error: This is the tendency to focus on the good, unusual, or easily remembered experiences, while forgetting the bad, common, or less available ones. Players often feel they are ahead in a hand because they want to be. Most the bad beats you hear people complain about probably weren’t as bad as they make it out. Hearing that someone has won the lottery sticks in our mind more than hearing that someone has lost…and lost…and lost. The draw to the long shot comes to mind. The overvaluing of high gain, low probability wagers and the undervaluing low gain, high probability wagers is a bad idea just on the fact that your profit will be less due to the high percentage rake on the one-time gain. Think of the taxes on lotto winnings for a macro example.

Mis-atribution of cause: If you have played poker as long as I have, you may have seen some unusual occurrences. The same guy dealt rockets two or three times in a row. Monster hands going up against each other. Someone going on a ten hand winning streak complete with showdowns. These are unlikely events that may make you cry foul, but then again, eventually these things just happen.

I get by with a little help from my facts...
http://www.theskepticsguide.org/resources/logicalfallacies.aspx
http://www.math.byu.edu/~jarvis/gambling.html
http://en.wikipedia.org/wiki/Fallacies

6 comments:

  1. Errors in thinking = Errors at the ATM | HellsColdDay.com...

    Our rational minds are often trumped by our emotions/wishful thinking/drunken state. Which leads us to the topic of today’s post: logical fallacies and how they can be applied to poker and gambling....

    ReplyDelete
  2. I am guilty as charged. In a #tpt tourney about a month ago, I won a hand by staying until the river. It was a four outer and I hit it. That is a 22 to 1 shot. I was criticized about it and thought that the player was being unfair. I thought about it for a week or two after and realized that person was somewhat more right than I was. I tried to rationalize that I was in control as I was the one raising a minimum bet each time and being called instead of being re-raised. After careful consideration, I really had no business to be in the hand after the flop. It was not my great playing ability that won the hand but dumb luck, chance. My actual playing skills are fair at best and need work. Realizing this, I am working at improving my game. In fact, I am always trying to improve by reading, discussing and thinking about the game.

    Thanks for sharing your thoughts.

    Steve Brogan’s last blog post..Playing with a wild man at Limit Hold Em

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  3. It sounds like you were the dog in that hand, but it we think of it as a semi-bluff then you are okay. Even if you didn't catch, a big bet on the river might have won it for you...but I wouldn't really know unless I saw the hand history.

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  4. Very nice analysis. These are concepts I am very aware of but struggle with all the time. It's one thing to be aware of it and quite another to use that awareness effectively.

    Controlling emotions is one of the hardest leaks to fix for a poker player. Many use breathing exercises, meditation, mantras, etc.. to help them. And for good players emotional control is one of, if not the most, important factors to overall performance.

    Spore’s last blog post..More progress!

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  5. I disagree with your assertion that poker is a game of [part] chance.

    I read an article sometime ago on this, sadly I never recorded the link, but it stuck with me. As serious players, we should only care about the long term, any session or even hundreds of sessions is not important it is a much longer view, perhaps of our lifetimes and beyond that is important. In taking this view there is simply no luck in poker, being an inherent game of sill over the long haul you will win what you statistically have coming to you, based on your skill alone, nothing more.

    To be fair most people won't play enough to get sufficient hands in to meet the long run from a mathematical stand point, but I don't think that invalidates the idea.

    If you play long enough, there is zero luck in poker, only over the short term will your winnings be influenced by luck.

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  6. Stop telling people these things - do you realize how much you are costing me in side action?!?!?!?!?!

    Just kidding (kind of).

    I think many people kind of misunderstand the concept of chance (sorry, Lucky, but I'm talking about you, too, here). Chance, in poker terms, is not necessarily the same as luck, but more akin to probability, and even in the longest of terms, you can only narrow the variance, you can't eliminate it. So, there will always be chance, no matter what. If you want to call that luck, that's fine - I probably do a lot, too - but luck doesn't necessarily mean the difference between being a lifetime winner or loser. It could mean the difference between having a 5% ROI and a 6% ROI over a long haul.

    KC

    KC’s last blog post..Tips to Make Home Poker Tournaments Run Smoothly

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