Ante Up

• Goal = get into the world of poker for a year to better understand the line between skill and luck, what one can and cannot control, and how perceptions of control affect our decision-making in the face of uncertainty

  • In experiments on investing strategy, illusion of control or skill → people are less likely to learn from environment → make poorer decisions
  • Luck vs skill is inherently probabilistic, and our brains are not good at understanding this → prioritize anecdote and instinct over data = description-experience gap
  • Experience = powerful tool to help id learn to understand probabilistic scenarios, when structured as systematic learning process— like poker

  Consider the 7.5 billion people who currently make up the world’s population and you can be sure that the highly improbable is happening with regular frequency. The “one chance in a million” takes place every second.

• Poker “stands at the fulcrum that balances two oppositional forces in our lives— chance and control” → ideal experiential scenario to understand strategy & decision-making

  • No Limit Texas Hold’em → precise amt of common vs private info; no limit on bets
    • Public info = first three cards (flop), fourth (turn), and fifth (river); private = your own two cards
    • No limit mimics the stakes and emotional element of real life

• Starting from scratch, how far can psychology, qualitative reasoning take you when facing mathematics, statistics, algorithms?

The Birth of a Gambler

• Unlike in games of perfect info (like Go, chess), in poker you can win the the worst hand and lose with the best hand → skill plays a big role
  • Actual best hand is rarely the winner
• Kant → betting on uncertainty is one of the best ways to understand it— keeps us from conflating 90% and 100%, invokes personal accountability
• Poker teaches you to calibrate the strength of your beliefs, and to be comfortable with never having

The Art of Losing

• Biggest key to success is objectivity
  • Kipling → “If you can meet with Triumph and Disaster // And treat those two imposters just the same...”
  • Winning early makes us think we’re much more skilled than is possible (that we can predict a coin toss, say)
• Less certainty, more inquiry

The Mind of a Strategist

• Value of position— being able to bet after everyone else
• Pressure of time → people often make (bad) decisions based on instinct
• To truly learn from strategic experiences, need to have a reason for every decision you make— otherwise you never know whether skill or luck are behind the outcome
• Poker as war, or jazz (more positive-sum) → must constantly be re-evaluating depending on actions of others
• Have to learn to “pick your spots”— if you only bet when you have the best hand, people will notice and you won’t ever win big → have to learn when to be aggressive to maximize long term profits

A Man’s World

• False sense of security in passivity, but you’re still losing money
  • But for women, this results from being socialized to be passive, to not negotiate or ask for more
• Gambler’s fallacy → faulty idea that probability has a memory
• When you’re a beginner, you think about everything, and when you’re very skillful, you do too... the period of proficiency is most dangerous → act on instincts not yet backed by experience

No Bad Beats

• Casinos basically designed for the opposite of creative or emotional well-being— deplete decision-making abilities and emotional reserves (no nature)
• Can’t get fooled by lucky streaks... “True skill is knowing your own limits—and the power of variance in the immediate future.”
• Power of language in dictating our mental habits— dwelling on bad luck → fail to see opportunities to work past it
  • Focus more on your decision than the outcome

Texting Your Way Out of Millions

• Fallacy: overconfidence in your opinion from thinking you know more than you do just because you have more information
• Attention = powerful motivator of overconfidence, forcing you to constantly reevaluate → can maximize skill edge, minimize how much you leave to chance

A Storytelling Business

Never do anything, no matter how small it might seem, without asking why, precisely, you’re doing it. And never judge anything others do without asking the same question.

• Does you no good to just get mad at someone for making a decision you wouldn’t— can learn so much more if you don’t forget the why.

The Gambler and the Nerd

• Lodden Thinks: two people bet on what a third person answers to some question (anything from “How old is Clint Eastwood?” to “How much would someone have to pay you to never wear socks again?”)
  • All about reading the person, not the true answer
  • Played Price is Right style

The Art of the Tell

• Our brains are prediction-making machines
• Initial, fleeting perceptions of people = thin-slice judgements → usually based on inputs like facial structure, expressions, our own experience
  • Intuitive & based on large samples → break down at individual level
  • Consensus about what a trait signals doesn’t mean it’s true— ex. most popular teachers are usually not the most competent
  • Judgements on certain traits influence our perception of others, and we often are unaware of this (ex. we find a more likeable person more attractive, but cite attractiveness as why we find them more likeable)
• Is there a scientifically-based approach to judging when people are lying, or forming more accurate perceptions of them?
  • If we pay attention to the right things, our intuition actually does pretty well at predicting behavior (hand motions → whether or not someone is bluffing, but not judgements about them overall)

Reading Myself

• Tells = repeatable patterns and behaviors, not one specific gesture; generally don’t involve facial expressions (easy to mask)... studies found two main patterns:

  • Thought process/approach to game → how you handle your chips
  • Concealment: how players choose to actively hide what they think are telling behaviors

• Cognitive-affective personality system (CAPS) = proposed by Mischel; alternative to personality trait tests like the Big Five

  • Very context dependent— can be thought of as “if-thens”

  People aren’t a combination of traits. They are a mosaic of reactions to and interactions with situations.

  • Accounts for dynamic nature of how people’s tells can change over the course of a tournament

Full Tilt

• Irrational perseverance → when faced with a choice, we give up rationality instead of the enterprise
  • Leads to planning fallacy— tendency to be overly optimistic about timelines & goals
  • Which then leads to sunken cost fallacy— keeping to course of action just because of resources you’ve already invested
• Knowing about a fallacy or bias doesn’t make the intuition less attractive!
  • We actively avoid to get more information about a choice once we’ve made an intuitive decision so that we won’t feel like we have to change our minds
• In poker, tilt = making decisions based on emotion
  • Ultimate goal is not to stop experiencing emotions, but to identify and abs luxe them, evaluate whether they contain useful info to our decision-making

The Ludic Fallacy

Chance is just chance: it is neither good nor bad nor personal. Without us to supply meaning, it's simple noise.

• Only things we can control are our actions, thinking, reactions, decision processes... cannot control body, property, reputation, command... (Epictetus)