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More Than You Know
Aug. 12th, 2006 10:35 amI've started reading Michael Mauboussin's More Than You Know (Finding Financial Wisdom in Unconventional Places)
You know that a book whose first chapter is about "Process And Outcome" and which quotes Sklansky at the beginning, is probably going to have some sensible things to say.
The first couple of chapters don't say much that thinking poker players don't know already, but they are worth re-reading anyway.
One that got me thinking was the hardwiring into our brains whereby we like a large proportion of small beneficial outcomes rather than a few large beneficial outcomes. Mauboussin also cites the number of "a gain needs to be 2.5 times the equivalent loss for the pleasure felt from the win to equally counteract the pain felt by the loss".
Now, we've read a few times how this applies to individual hands of poker. People will often want to make sure that they win a pot, rather than make the move that has maximum EV, but which slightly reduces their chance of winning the pot. This is such a trivial case that examples don't bear repeating. Overbetting in No Limit, raising in Limit where a call against an agressive player would take more money out of him, etc.
But it applies elsewhere in poker. In tournaments, the "getting into the money" concept is clearly an example of the frequency of correctness being more important than the magnitude of that correctness. "I've got six cashes in ten tournaments" is a statement of utter meaninglessness. Fuck, it, just tell me how much you are up and what your return on investment is, because (in this instance) those are the only two numbers that matter.
Where else in poker does this "frequency is more important than magnitude" take hold? A blatant example is the "booking a win" scenario. Here the frequency of the win is applied not to the hand, but to the session. It causes us to tighten up when we are slightly ahead for the night, because we want to come out ahead. I feel it myself. Feeney wrote that he felt the same whether he went from a grand down halfway through the session to $100 up at the end, as he did when he went from a grand up down to $100 up at the session.
But he doesn't say how he felt when he went from a grand up to $100 down at the end, compared to a grand down to 'just" $100 down. Exactly the same? Somehow, I doubt it.
If we, poker players who understand this kind of thing, still suffer from it because it is hardwired into our heads, how much more must it impact other players? How many players are prepared to give up frequency for magnitude? Not many, I suspect.
So, here's our motto for the day, to be written on the wall.
"The frequency of correctness does not matter; it is the magnitude of correctness that matters".
and, as a codicil.
"You opponent is almost certainly unaware of this".
++++++++++++
You know that a book whose first chapter is about "Process And Outcome" and which quotes Sklansky at the beginning, is probably going to have some sensible things to say.
The first couple of chapters don't say much that thinking poker players don't know already, but they are worth re-reading anyway.
One that got me thinking was the hardwiring into our brains whereby we like a large proportion of small beneficial outcomes rather than a few large beneficial outcomes. Mauboussin also cites the number of "a gain needs to be 2.5 times the equivalent loss for the pleasure felt from the win to equally counteract the pain felt by the loss".
Now, we've read a few times how this applies to individual hands of poker. People will often want to make sure that they win a pot, rather than make the move that has maximum EV, but which slightly reduces their chance of winning the pot. This is such a trivial case that examples don't bear repeating. Overbetting in No Limit, raising in Limit where a call against an agressive player would take more money out of him, etc.
But it applies elsewhere in poker. In tournaments, the "getting into the money" concept is clearly an example of the frequency of correctness being more important than the magnitude of that correctness. "I've got six cashes in ten tournaments" is a statement of utter meaninglessness. Fuck, it, just tell me how much you are up and what your return on investment is, because (in this instance) those are the only two numbers that matter.
Where else in poker does this "frequency is more important than magnitude" take hold? A blatant example is the "booking a win" scenario. Here the frequency of the win is applied not to the hand, but to the session. It causes us to tighten up when we are slightly ahead for the night, because we want to come out ahead. I feel it myself. Feeney wrote that he felt the same whether he went from a grand down halfway through the session to $100 up at the end, as he did when he went from a grand up down to $100 up at the session.
But he doesn't say how he felt when he went from a grand up to $100 down at the end, compared to a grand down to 'just" $100 down. Exactly the same? Somehow, I doubt it.
If we, poker players who understand this kind of thing, still suffer from it because it is hardwired into our heads, how much more must it impact other players? How many players are prepared to give up frequency for magnitude? Not many, I suspect.
So, here's our motto for the day, to be written on the wall.
"The frequency of correctness does not matter; it is the magnitude of correctness that matters".
and, as a codicil.
"You opponent is almost certainly unaware of this".
++++++++++++
