"Predictably Irrational" reconsidered

A couple of weeks ago I posted a brief review of Dan Ariely's book Predictably Irrational. I said that I hadn't found anything relevant to poker in it. I think that conclusion was premature. The lessons taught in the book have continued to turn over in my mind during idle moments, and I see more poker implications than I did at first.

1.

One of them, in particular, should have been obvious to me when I was writing the original review. In chapter 5, Ariely discussed "The Influence of Arousal"--how we tend to make much worse decisions in emotionally charged environments than we do when we are calm and detached from the situation. What's more, we make decisions that in our calm state we confidently predict we would never make under any circumstances. The particular experiment described in most detail involves male college students who were asked to answer questions about what they found sexually appealing and whether they would be inclined to engage in many different sexual activities. Later, they were placed in circumstances that would virtually ensure that they were in a sexually aroused state, and asked the same questions again. The answers changed quite dramatically. For example, the portion answering affirmatively to "Can you imagine being attracted to a 12-year-old girl" rose from 23% to 46%. The portion answering affirmatively to "Would you keep trying to have sex after your date says 'no'?" rose from 20% to 45%. The portion answering affirmatively to "Would you always use a condom if you didn't know the sexual history of a new sexual partner?" fell from 88% to 69%.

I think we have all experienced similar distortions in our perspectives when playing poker. Away from the table, in calm, rational cogitation about the game, we know what starting hands are profitable; we know how to tell when our pocket aces are likely to be no good; we know that we shouldn't keep playing when we are tired or angry or otherwise tilting. But then we get into the poker environment, and many of the commitments we made to ourselves--about playing tight-aggressive, about not trying to play from out of position, about stop-loss or win limits--go out the window. After an hour of being dealt unplayable hands, that 8-4 offsuit suddenly seems to have some real potential. Boredom, frustration, anger, and, conversely, the elation of an unusual lucky streak, can all take their toll of the soundness of our decisions. It is an insidious process.

Being aware of it is a necessary first step to combating it. More important, though, is to set specific, inviolable rules for oneself that take precendence over decisions made in the heat of the moment--hence the wisdom of things like rules for when you will leave the table (after a certain amount of loss or win, after a certain amount of time, after the game gets uncomfortably short-handed, after you start yawning--whatever you might set for yourself). If you are prone to a patterm of making the same kinds of bad decisions during the course of a poker session, you have to set such rules for yourself, admitting to yourself that you know you tend to make bad decisions, and the rules are a safety net preventing the adverse consequences of such decisions. (Of course, if you're immune to such things, then never mind.)

As an example of what I'm talking about, one of my personal rules is that after two consecutive losing days of poker, I must take a day off from live play. It helps me break the cycle of chasing losses with bad play in a desperate effort to catch up or get back to even. I enforce this on myself rigorously, even when that "next day" is one on which I don't have any other commitments and could put in a lot of hours, and even when I'm feeling well grounded and untilted. I have learned not to trust myself to make such judgments well after two losing days, so I take the day off, mentally hit "reset," and I'm able to start fresh the next day. I suspect that this rule has saved me a ton of money in what would otherwise have been third straight losing days due to marginal play that I wouldn't have recognized as such until after it was too late.


2.

In Chapter 4, Ariely discussed "The Cost of Social Norms." For example, you have a lovely Thanksgiving dinner at your in-laws' house. Then you offer to pay for what you ate, as if you had been in a restaurant. This will, of course, insult your hosts and cause you never to be invited back. As another example, you might well be able to get professionals to donate their time to some good cause, but if you offer to pay them a reduced rate for the work, they turn it down. Why would somebody be willing to work for free, but not for a rate far below what they usually charge? Because if they feel that they are donating their time to something they believe in, they feel good about themselves. If they get paid a pittance, they tend to feel that they have just made a bad bargain. Ariely spends a lot of time discussing situations in which the social norms (e.g., your willingness to help a neighbor move a new couch into his house) can conflict with business norms (in which you charge your neighbor the same hourly rate that a professional mover would get for helping with the couch). The results are interesting, but you'll have to read the book for more detail.

But you can probably see how this applies to poker. Mike Caro is big on becoming especially friendly with the player on your immediate left, because that is the one that is in the best position to hurt you. Buy him a drink or a cup of coffee. Go out of your way to make nice with him. It might cause him to check or call when he would otherwise raise, or in other ways be less aggressive in his play with you than he should be and than he would otherwise be, thus saving you money. We've all seen players say things like, "OK, it's a friendly game, and you're a nice guy, so I'm just going to check," then turn over the stone cold nuts. These players are allowing the business norms that are supposed to govern how smart, serious poker players approach the game to get mixed up or contaminated with the social norms that tell us to be nice to each other, not to kick a guy when he's down, and so on. Predation on the weak is an essential part of winning poker, but it conflicts with our social upbringing. We can manipulate others to confuse these roles and perspectives to their detriment. We can be vigilant not to allow such admixture in our own game, thus maximizing profit.

One of the best posts my friend Cardgrrl has ever written was on this very subject--the dichotomy between the traits of successful poker players and the social norms that prevail everywhere else. It's called "On Being Bad," and it's worth a read, or a reread.


3.

One of the psychological traits Ariely discusses that most surprised me was the tendency to overvalue things that we already own (Chapter 7: "The High Price of Ownership"). It is commonly observed, for example, that home owners always think the house is worth more than prospective buyers do. This isn't just trying to get maximal return; they really feel, deep down, that the house is worth more than it actually is (assuming that actual value is determined by what somebody else is willing to pay).

The most interesting experiment described in this section involves college students who enter a lottery for the chance to purchase tickets to Duke basketball games. The process is elaborate. The details don't matter here, except for this: Some students get to buy tickets, others don't. The question is, how much will the tickets be valued by those who have just purchased them, compared to how they will be valued by those who wanted to purchase them, but weren't picked in the lottery? It turns out that the discrepancy is huge. Tickets owners, when surveyed, said that their asking price would be an average of about $2400. Lottery losers, on the other hand, said that they would only be willing to pay an average of $170. Remember that very shortly before, both groups were presumably equally interested in owning the tickets.

In short, we tend to overvalue what we already possess.

How does this apply to poker? This is what I've been spending quite a bit of down time at the table thinking about. I believe it comes into play in several ways.

Consider how some players physically separate the chips they bought at the beginning of the session from those thay they have won since starting the game. They mentally treat them very differently. If making a questionable call requires only the chips they won, they are far more likely to be willing to make the call than if it requires that they dip into the buy-in chips. Mentally, it seems, they haven't fully taken ownership of the chips they have won (perhaps because they haven't yet been converted into cash). But the ones they bought from the casino cage--those, they are acutely aware, represent money that they brought with them to the poker room. They are fully invested in ownership. They value those chips more than the ones they have won, even though there is no difference in cash value.

To be a winning player, you have to think of and treat chips as tools for acquiring more chips, and disregard their real-world equivalent monetary value. You have to remember that each chip in front of you might win you two or three when the opportunity presents itself for a double-up or triple-up--but you have to be able and willing to risk losing them all in pursuit of such opportunities. If you overvalue the chips you have, and hold on to them like a miser, you'll miss chances to get more of them.

Another example: When you look down and see pocket aces, I'll bet that whether you consciously realize it or not, you start to feel ownership of the pot that is to develop. You feel entitled to it; it's rightfully yours. I think this is part of why players have such a hard time letting go of aces and kings--they value raking in that pot more than is justified by its real monetary value combined with the probability that they hold the best hand, because they have prematurely taken mental possession of it, and it's hard to let it go once that process has begun.

I think the same sort of thing explains some tournament players. They are unwilling to take appropiate and necessary risks that might propel them deeper in the tournament because (1) they over-value the chips they currently have, and (2) if they are in the money, they over-value the payout they have already won compared to what they could win if they played more fearlessly.

It may be that in at least some circumstances we value new things more than old. Think about how one treats the new car--waxing it every weekend, not allowing any food to be eaten in it, freaking out when the first inevitable scratch or ding occurs. Over time, we get careless. Children are notorious in this regard with Christmas presents--they play with them intensely, then later neglect them and won't notice if they're sold at a garage sale.

I think there is something akin to this with poker chips, at least for some players. Just tonight I was playing at Imperial Palace, and a woman had taken a big hit early on, then won a big pot that got her back to approximately even. Soon thereafter, she had an opportunity for a triple-up if she called all-in bets from a two opponents. She had a pair and a flush draw, which tends to be a pretty good spot to make such a call. But after thinking about it for a while, she mucked her cards face up and said, "I should call, but I just got these chips back."

In other words, it actually mattered to her how long she had had ownership of the chips. The implication is that if she sat there and folded every hand for an hour and then this situation arose, she would have been more willing to gamble. But, of course, the actual value of the chips wouldn't be any different, nor would the analysis of whether the call was one with a positive expected return.


Anyway, as you can tell, I have come to think that the psychological truths that experimenters like Ariely are uncovering about the flawed ways in which we all tend to make decisions do, in fact, have repercussions at the poker table, if one thinks about it enough. There are undoubtedly many more such examples. I will continue to mull it over, and if I come up with more, I'll do another post along these lines. Readers are, of course, encouraged, as always, to contribute further suggestions via the comments function.