Money and poker are like the lyrics to that classic song Love and Marriage; you can’t have one without the other.
In poker we deal with cash on a daily basis and making good monetary decisions is crucial to a player’s success. The game requires good bankroll management in the long term and analytical +EV decision making in the short term.
One would think, given how frequently poker forces tough decisions, card players make better money related decisions than the average Joe. Well, not really.
The truth is that we're just as susceptible to errors in judgment as anyone else. Often the same mental shortcuts that guide us in our daily lives carry over to the tables.
Psychologists, economists, sociologists, anthropologists and several other types of researchers whose titles end in ‘ist’ have been studying human behavior for centuries. One common theme unifying these fields of study is money and how it affects people.
It seems when it comes to cash we all tend to think alike, even when our thinking is illogical.
That's a bold claim and a bit tough to accept for a poker player. While it's certainly a curious phenomenon surely we, the exclusive inhabitants of the poker sub-culture, are immune to such broad claims, right? Those types of conclusions, they don’t extend to us. We’re savvy poker players and we make decisions of the out-of-box variety. Right?
If it were true it would bruise our collective ego. Well, actually, yes, it is true.
Author and behavioral economist Dan Ariely cites several fascinating (and often humorous) studies on his website DanAriely.com that evaluate how and why people are extremely susceptible to cognitive manipulation when money is involved, even if they’re forewarned.
From a poker perspective, this sort of information opens massive doors not only into our opponents’ minds but also our own. Knowing how someone will react to a given situation is an immeasurable edge at the table. As well, being able to see one’s own flaws in thinking can save some serious chips.
In his blog post from November 1st 2009 – The Psychology of Money and Habits, Ariely discusses how consumers develop heuristics (which are sets of rules that “provide us with actionable outcomes that might not be ideal but they help us to reach a decision”) to help choose an item when more than one is available.
In poker we see this every time it is our turn to act. The choices are simple - check, bet, raise or fold – but the decision making process is often complex.
The problem with heuristics, as mentioned in Ariely's blog, is that even if conditions arise to disprove the validity of our choice, we still lean on the heuristic because it saves time, deliberation and stress. This is thin ice on which to tip-toe for a poker player.
Suppose you ‘ve been playing a cash game for 7 hours. You're suddenly in a big hand and find yourself contemplating a decision on the turn.
During this session you’ve notice that this same type of situation has occurred numerous times (not necessarily to you but collectively amongst the players at the table). You have top two pair with a flush and straight draw(s) on the board.
Your hand: Q♦ T♦
Flop: Q♥ T♣ 7♥
Turn: Q♥ T♣ 7♥ 5♦
Your ability to assess the situation and read the one remaining opponent is quite strong. Using some standard arithmetic, you calculate your edge in the hand to be fairly dominant. With your read you put yourself, at worst, 60:40 here. If he has what you think he does, your edge increases to almost 70:30.
Now, before you can get the necessary chips in, cognitive psychology comes knocking. You can’t stop thinking about all the flush draws that hit earlier that night.
You get a flash memory of the lady across the table sucking out on two straight one-outers and that older guy who went runner-runner on your set of aces just before your spaghetti bolognaise arrived.
These things should not be impacting your decision but this is precisely what happens. When that little hamster gets rolling the human mind can work in funny ways, often not the way we’d expect it to.
Instead of making a strong bet to put the onus on your opponent, you let results from previous hands influence your play and you decide to play conservative. You opted for a short term heuristic (memory of previous hands) to guide your selection instead of long term statistics and reasoning.
You check and allow a free river card. Not only have you given your opponent a chance to win the hand, you also lose value on the river because you were afraid on the turn. Now, no matter what happens on the river, you can’t achieve the optimal result in the hand.
You’ve created a lose-lose situation for yourself.
More experienced players who have been around the game longer realize that variance is an infinite process and not something that can be redefined in one night.
These players are the ones who are able to eliminate mental distractions and let math dictate their decision making in tough spots (assuming your opponent isn’t leaking some giant tell).
It is important to remember that each one of us is vulnerable to the routines and patterns of our thought. Make concerted efforts not to assume that only your opponents are in danger of making mistakes.
We all make mistakes. Reduce yours and reap the benefits.