I just finished Predictably Irrational by Dan Ariely. Ariely is a behavioral economist, which means he studies quirks in people’s decision making. Whereas classical economics operates under the assumption that everyone tends to behave rationally in their own self interest, behavioral economics explores situations in which people systematically and predictably make irrational decisions. For example, one of Ariely’s studies demonstrated that students were far less likely to cheat on a test when they had been asked beforehand to recite the Ten Commandments (even if they couldn’t remember any of them). Otherwise there was no difference between the test takers, but just being reminded of an ethical code made a huge difference in their behavior.
I find the classical economics/behavioral economics split mirrored closely in game theory/psychology, arguably the two main axes of poker. Most game theory research focuses on finding optimal strategies, assuming opponents will play optimally as well. In poker it’s important to understand game theory concepts, because knowing what a game theory optimal (GTO) strategy would look like can help you understand how your opponents are deviating from that kind of strategy and how to exploit them. But when you actually sit down at the poker table with the goal of winning as much money as possible, it’s far more important to understand what makes your opponents tick; how they actually play, not how they should play. Not surprisingly, poker is filled with predictably irrational moments.
Two robust results from behavioral economics research are that first impressions create strong and persistent biases, and that we tend to overvalue things we own. These tendencies combined cause many players to make mistakes when the strength of their hand changes suddenly. For example, say we raise ace-deuce of diamonds, get called by one player, and the flop comes king-ten-six with two diamonds. We have a draw to the nut flush, a very strong hand. Our opponent checks, we bet, and he calls. The turn is a five, not of diamonds. He checks again and we bet again, hoping to take down the pot, but knowing that we still have a lot of outs if we’re called. He calls again. The river is another ten, still no diamond, and our opponent checks. A lot has changed since the flop. Our opponent called twice, indicating a pretty strong hand, whereas we missed our draw and now have just ace-high. Most players when they flop a draw this strong anticipate winning the pot – their first impression is that they’re going to win, and they begin to feel ownership over the pot. These feelings are still in play on the river, even though the situation has changed dramatically. The result is that they’ll be far more likely to bluff the river with ace-deuce of diamonds than if they had, say, ace-deuce of spades. After missing the diamond draw they just can’t bear to give up on the pot, whereas if they had ace-deuce of spades and were pure bluffing on the flop and turn, they’d be far more likely to give up on the river, even though at that point both hands are basically the same.
I also read about new research that showed participants made more conservative financial decisions when their bladders were full. Apparently, the restraint they had to exercise to not wet themselves leaked into their financial decision-making. I’ve made a mental note to consciously bluff more when I’m at the table and have to pee, because my natural inclination will be to play too conservatively.