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Poker and the Human Brain

(Article on Behavioral Economics useful for Marketing)
By Amit arma Au&ust 1'( ')1) !in "ahoo #ews $ndia%

$ spend as much time playin& poker these days as $ once would spend readin& and writin&( and my *riends sometimes ask me in +est what literature and poker have in common. ,y reply is that both provide an understandin& o* human nature. $ am not bein& *acetious. -ver since $ started playin& poker seriously( $.ve held the view that poker reveals the way our brain is wired. For e/ample( i* we carry a list o* co&nitive biases with us to a poker session( and tick o** the ones we witness in action( we.d probably run throu&h the entire list by the end o* the evenin&. $* we.re aware o* this( we can e/ploit these missteps in others -and avoid them in our own play. $n writin& this article( $ run the risk o* revealin& to my re&ular opponents a *ew o* the tricks o* my trade. But *or the &reater &ood o* humanity( $ shall lay those considerations aside. 0ere( then( are a *ew o* the co&nitive biases that come into play on a poker table. 1. The unk!"ost #allac$. 1uppose you are in o**ice one day( and there is much bu22 about a new 3apanese restaurant that has opened round the corner. 45et.s &o there *or lunch(4 you su&&est. All your re&ular cronies concur( e/cept one &irl who says( 4$ so want to come( but $.ve &ot lunch *rom home( and it will be wasted.4 6hat is her only reason *or not comin&. 1he doesn.t want the packed lunch( and would vastly pre*er some una&i( but the 1unk 7ost Fallacy comes in the way.

6he lo&ical way o* thinkin& about this is that the packed lunch is a sunk cost -- and that i* she would otherwise pre*er to come to the new 3apanese restaurant( then she should i&nore that sunk cost and come anyway. 6his is the same mistake many stock market investors make. 6hey will buy a stock *or( say( 8s 9). $t will slip to 8s :). $ts downward momentum will make it lo&ical to sell the stock( but they will reason that they have already lost 8s 1) on it( and will keep the stock in the hope o* recoverin& that money somehow. ;oker players make the same error by throwin& in &ood money a*ter bad. 5et us say that you have pocket aces. "ou raise pre-*lop( a loose player calls( and the *lop comes A<3 with two hearts. !"ou have none.% "ou have a set( but slow-playin& is dan&erous because o* the *lush and strai&ht possibilities out there( so you make a pot-si2ed bet. "our opponent calls. 6he turn is a ten o* hearts. "ou make a bet two-thirds the si2e o* the pot( and your opponent raises three times that. For any &ood player( unless you have a read that the opponent is weak( this is an auto-*old. 6here are *our cards to a strai&ht out there( three to a *lush( and i* your opponent has one o* those( you have e/actly ten outs to a *ull house or =uads( and the odds don.t +usti*y continuin&. But you say( "I have already spent so much money on this pot. All that will be wasted. I can't leave now." >ood poker players know that the money already in the pot no lon&er belon&s to you( and that at every street you must make new evaluations about how to proceed. But we are human( we have put money in the pot( and it.s so hard to let it &o. $sn.t it? Also see: Escalation of "ommitment. %. The Endo&ment Effect. 6he above poker e/ample also illustrates the -ndowment -**ect( which @ikipedia describes as 4a hypothesis that people value a &ood or service more once their property ri&ht to it has been established.4 $t.s been much written about recently in a slew o* books about behavioural economics( and is a bias we o*ten see in poker when a player .*alls in love with his hand.. $n the above e/ample( i* you are a spectator watchin& the hand( it is obvious that the set o* aces should be *olded. $n the

middle o* the action( thou&h( you ascribe more value to the hand than you would i* some other player held it because it.s your hand( and it.s so hard to let it &o. Almost all re&ular players have *aced a situation where they play AA( *lop top pair-top kicker( but their bet on the *lop encounters a bi& raise !or even an all-in% *rom a solid player who doesn.t make cra2y moves. 1een *rom the outside( it.s time to consider *oldin&( because he could have a set or two pair( but i* you.re the &uy holdin& AA( it.s so much harder to make that dispassionate decision. @hen $ started playin& poker( $.d re*er to this as the tarting Hand Bias. @eak players who hold 33 will o*ten be reluctant to *old to a bet *ollowin& a *lop that has two overcards( and players who have AA or A<s will *ind it hard to &ive it away when they don.t connect on the *lop. $t takes discipline to overcome this bias and throw the hand away. '. The (ormalc$ Bias. @ikipedia de*ines this as 4an e/treme mental state4 that 4causes people to underestimate both the possibility o* a disaster occurrin& and its possible e**ects.4 6his is related to the Availa)ilit$ Heuristic( 4a phenomenon in which people predict the *re=uency o* an event( or a proportion within a population( based on how easily an e/ample can be brou&ht to mind.4 6wo e/amples come to mind *rom my own play( a&ainst the same opponent. $n one case( there were *our cards to a *lush on the board( with no repeat cards( and $ had the ace o* that suit -- in other words( the nut *lush. But the *our cards were connected with a &ap in between( and there was the small chance that my opponent had the one card that made her a strai&ht *lush that beat my hand. $ raised( she insta-reraised( and my read was that she was very stron&. But $ thou&ht( 4#ah( strai&ht *lushes are so rare( she can.t possibly have one.4 $ did re*rain *rom re-reraisin& all-in( thou&h( and merely called( to be shown the only hand that could beat mine. $n another hand( $ had a *ull house and was reraised on the river. 6he only hand that could be beat me was =uads( and my opponent( who is not di**icult to read( showed immense stren&th. <uads are so rare( thou&h( that $ i&nored my read and called. "ou &uessed it: Black 1wan event.

@e see the same phenomenon when a player *lops a low *lush( and is =uite happy to reraise all-in( assumin& that his hand is surely the best hand( because hey( he can.t remember the last time two players *lopped a *lush. 6hat.s e/actly the kind o* hand that busts players out o* tournaments. *. The +ecenc$ Effect. 6his can be de*ined as 4the tendency to wei&h recent events more than earlier events.4 @ikipedia &ives an e/ample: 4$* a driver sees an e=ual total number o* red cars as blue cars durin& a lon& +ourney( but there happens to be a &lut o* red cars at the end o* the +ourney( they are likely to conclude there were more red cars than blue cars throu&hout the drive.4 $n poker( this can lead us astray a&ainst loose opponents. 5et us say that in the last hal* an hour o* a session( you have seen a player raisin& with A<o( <6o( 9Bs( A:s and even C8o( all mar&inal !some outri&ht dubious% hands( especially *rom early or middle position. 1o you.re in a hand where he.s raised *rom early position( and you have A3s. "ou reraise( he calls. 6he *lop is A'D rainbow. 0e checks( you bet the pot( he reraises by three times( a move that recent evidence indicates he is capable o* makin& with nothin&. @hat do you do? $.ve &one all-in a similar situation( only to be shown AA. $ had *allen prey to the 8ecency -**ect. $.d made a move based on his recent play( =uite i&norin& that even loose players &et &ood cards( and that my hand( because o* the +ack kicker( was not =uite a monster. 6his is a bias that &ood players can e/ploit success*ully by chan&in& &ear in the middle o* a session. ;lay loose *or a while( then suddenly &o ti&ht( and you will &et paid o** on premium hands. ;lay ti&ht *or a bit( and then make a blu**( and your opponents will &ive you more credit than is due and *old. Also see: The Primac$ Effect( 4the tendency to wei&h initial events more than subse=uent events4. "ou o*ten see sharks e/ploit this by startin& a session with some loose play( *or advertisin& e**ect( so they &et paid o** on their premium hands later by players overvaluin& mar&inal holdin&s. $n

other words( these sharks behave like *ish at the start o* a session( and later &o chomp chomp chomp. ,. The "onfirmation Bias. 6his is the tendency to i&nore all in*ormation that contradicts our preconceptions( and to treat all other in*ormation as evidence. ;eople who believe in astrolo&y( *or e/ample( will remember all the instances when an astrolo&er.s predictions came true( and i&nore all the times they did not. Eitto homeopathy( and suchlike. $ see this all the time with poker players. $ know players( *or e/ample( who love to play hands like C8o and :D( and will call bi& pre*lop raises with them. 6hey have stories about how they once *lopped a strai&ht with :D( beatin& two opponents who had AA and <<( and so on. Another player $ know has a &oo*y theory that i* two or three players have shown stren&th with pre*lop raises and reraises( and he has two low cards( he should call because the other all surely have hi&h cards( so there is a &reater probability o* low cards hittin& the board. !>o *i&ure.% ;layers with belie*s like this remember the hand*ul o* times such play works *or them( and i&nore all the other times when it doesn.t. $* you play a hand like 8Co( you will *lop two pair or better appro/imately one in DF hands. 6he rest o* the time( you are basically losin& money. @eak players remember the one time they hit -- not the DD times they don.t.
Also see: 6he 1emmelweis 8e*le/. ---6his is a sub+ect on which $ could &o on and on: there.s no end to the co&nitive biases one sees at a poker table( *rom 5oss Aversion to the 7hoice-1upportive Bias to the Gstrich -**ect to the Belie* Bias and obvious ones like the Gptimism Bias( the Gver7on*idence -**ect and the #e&lect-o*-;robability Bias !duh%. 7heck out this list o* co&nitive biases at @ikipedia: i* you are a poker player( you will surely reco&nise many o* them. For a while now( $.ve been mullin& over the idea o* writin& a book about how the &ame o* poker reveals how the human brain is wired -- so this may not be the last you hear *rom me on this sub+ect.
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