Egonomics 101
Overconfidence, Myopia and Hubris
"In most of our decisions, we are not betting against another person. Rather, we are betting against all the future versions of ourselves that we are not choosing... Whenever we make a choice, we are betting on a potential future."
— Annie Duke, Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts
The power of mind over money is rooted in mental bias. It is our own idiosyncratic way to distort our map of reality. Just as the menu is not the meal, this map is not the territory—because everyone experiences gambling differently. When your reality check bounces—change your map.
Flounders Versus Rounders
For the poker Balla, nothing is better than when that average Joe Player sits down at a poker table. Why? Because he just sat down with money he INTENDS to lose! There is no more +EV situation, and most tables in a live poker room are filled with players exactly like that.
A Joe plays when he "feels" like it, a Pro, all the time! Call them perpetual shortcuts JOES make when losing poker ASAP; and as any of the PROS will tell you, they don't need cards to win—that's for amateurs.
"Pros know the 60/40 end of a proposition—when to hold 'em and when to fold 'em—when you have some competitive advantage over somebody else."
Behavior Has Consequences
Irrational default modes of playing tend to show up in our game both when we win and when we are getting on tilt with bad beats. The Volatility and Variance of NLH rewards patience, a clear mind, and selective aggression.
Tilt and the Sunk Cost Fallacy
Tilt makes us sub-optimal for evaluating rewards, sizing up risks, and calculating probabilities. It's like selling the car for gas money.
Secrets to Beating America's 92 Million Irrational Poker Players
Common sense is not so common, and these common flaws are often consistent, predictable, and can be exploited for profit:
- Illusion of control: Believing we can control outcomes we cannot.
- Loss aversion: The pain of losses outweighs the pleasure of gains.
- Confirmation bias: Searching for information that confirms our beliefs.
- Outcome bias: Judging decisions solely by their outcomes.
Behavioral finance teaches us that understanding and managing these biases can improve both our game and our results.
Secrets to Beating America's 92 Million Irrational Poker Players
Common sense is not so common, and these common flaws are often consistent, predictable, and can be exploited for profit.
Illusion of Control
The tendency for players to believe they can control or at least influence outcomes which they clearly cannot. NLH is 100% luck and 100% chance. An opponent can (suck out) win one hand 100% of the time. NLH is too random to be left up to chance—yet good results will have you rejecting alternative ways to play. Nothing fails like success. Doing things right the first time is an obscenity—if your game isn't broke, don't just break it, break it before the competition does.
Loss Aversion
The pain of chips lost generally is much greater than the pleasure of chips gained. Players strongly prefer avoiding losses over acquiring gains. Quit early when winning and play marathon sessions when stuck or chasing—see also sunk cost effects. To win money over the long haul, you’ve got to win big pots. And to win big pots, you can’t be held back by this thinking error. You can't play a safe, tight-is-right solid game and expect to win. You can't avoid crisis; you must be in a perpetual one that you create... but selectively picking your spots.
Bias Blind Spot
The left side of the brain will do the math, but the right side will "tag" it with a story. That story usually doesn't compensate for one’s own cognitive biases.
Choice-Supportive Bias
It's called "anchoring": remembering one’s choices as better than they actually were. (Using the past to predict the future). There is never a certain prescribed way to play a hand, just a way to think about them. I've had racks of chips only to be felted 14 hours later because instead of an attitude of gratitude, I had the Mick Jagger "Tumbling Dice" soundtrack playing: "Anything worth doing is worth overdoing."
Endowment Effect
When I own something, I will tend to value it more highly. If I have to sell it, I will probably want to ask more than it is really worth. (Not being able to let go of QQ, AA, KK—rookie moves, and over betting the pot.) There's the expected result, based on analysis, and the actual result, based on events. Poker is a game of situations—I've learned to throw away Kings, Queens, and with a four-card flush on the board, even two red Aces!
Confirmation Bias
The Indians' Rain Dance worked because they never stopped dancing! The Jeane Dixon effect: making a few right predictions, and overlooking the false ones. Searching for information in a way that confirms one’s preconceptions. The delusions of reference—tells, lucky charms, hunches, and coincidences.
Bandwagon Effect
Do things because smart money people do or believe the same, like playing Hellmuth starting hands, or walking the painted line of Sklansky's Theory of Poker or Doyle's Super System. Related to groupthink and herd behavior. That's what I find so cool about my game—being able to fire three barrels with "squadush." (Thank you, Poker Stars Sit and Go's.)
"Great players lay down great hands. The ability to accept a loss and get away from a great hand is probably the most important skill to learn in poker." — Doyle Brunson