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Posted by Ed Reif» on - - 1 comments»

Egonomics 101---Overconfidence, Myopia and Hubris

The power of mind over money is rooted in mental bias . It is our own idiosyncratic way to distort our map of reality. Just as the menu is not the meal, this map is not the territory--because everyone experiences gambling differently. When your reality check bounces---change your map.


FLOUNDERS verses ROUNDERS -The difference in playing with the belief and intention of winning against just being social.

For the poker Balla, nothing is better than when that average Joe Player sits down at a poker table. Why? Because he just sat down with money he INTENDS to lose! There is no more +EV situation, and most tables in a live poker room are filled with players exactly like that. When you treat No Limit Hold em as only a game of chance instead of skill, it is not a law of probability, it's a fact for games with negative expectations: Risk of ruin is 100%.


A Joe plays when he "feels" like it, a Pro, all the time! Call them perpetual shortcuts JOES make when losing poker ASAP; and as any of the PROS will tell you, they don't need cards to win--that's for amateurs. Pro Players specialize in other people's biases! especially that malignant optimistic one that beats its chest and says, "I'm the best player at the table". Hotel Anyware considers himself an average player, except for the fact that he considers himself an average player!

Pros know the 60/40 end of a proposition--- when to hold em and when to fold em--- when you have some competitive advantage over somebody else. And you don't bet, you don't gamble, you don't invest, unless you have some competitive advantage.

Poker is a game of partial information, and when you have a competitive advantage you have to take into account this and, more important, behavioral factors. There is wise.... and there is otherwise:

Behavior Has Consequences

Irrational default modes of playing tend to show up in our game both when we win---the House Money Effect chip overload of playing loose with their money, and when we are getting on tilt with bad beats: That's when emotion and even confidence cloud our judgment and misguide our actions. The Volatility and Variance of NLH rewards patience, a clear mind, and, selective aggression.

American Airlines AA and the Concorde Effect—A True Story at the $100 Buy-In Bicycle Casino- Eating Dessert First.

I’m UTG, deep stacked with four limpers. I raise and get called by all four. I should muck right there but I don't. I’ve got pocket aces. The flop is low ball 3 4 7 rainbow. I bet big-a Dan Harrington "information" bet to see where I am at... and lose three players. The turn is a 5, a possible straight. I bet big again and get re-raised all in. I insta-call. The river is a blank. I flip over AA and Lift Ticket has Pocket 66. for the nuts.

The very next hand I get pocket kings--it was Dijon Vu, the same old mustard--My emotional return on investment however, my EROI, was saying "SEAT OPEN!" and the table could smell it and I got everyone calling, a family pot. I actually wanted to go home broke..and even though I tripped up, I lost to runner, runner, heart flush. I did. That's right,wanting to lose money. And that emotional return was more of a payoff than the financial one--when my black Kings got cracked by suited connectors (hearts, a baby flush!).

Granted, too much respect for money makes you a bad NLH player but I walked away from that session with knowledge: First, that my brain is the "most powerful computer." Second, when on tilt, my brain is the most powerful "broken computer ."

Tilt makes us sub-optimal for evaluating rewards, sizing up risks and calculating probabilities. It's like selling the car for gas money.

I walked away with a less broken computer, less sabotaging behavior, and more insight into the fact that self-delusion is more than possible in poker - it's highly likely!

Behavioral Finance ---The Black Box Flight Recorder has a name for my crash landing -- The Sunk Cost Fallacy --the refusal to get out of a losing position, because you've already written the money off -- resulting in losing even more money.

The British and French governments continued to fund the Concorde project long after it was determined that it was a loser---merely to justify past investment in it, rather than assessing the current rationality of investing.

You have an over pair on the flop and bet big. You get called. On the turn the texture of the board is dangerous. You bet out in the dark---suddenly you are stuck as your opponent straightens out.

We are in fact more sensitive to decreases in our chip count than we are to increases in them.

Doyle Brunson, a member of the MENSA Poker Club says: Great players lay down great hands. In fact, the ability to accept a loss and get away from a great hand is probably the most important (and difficult) skill to learn in poker. It's the difference between lightning and a lightning bug.

The ability to take a small loss to avoid a big one is the hallmark of this poker genius.We all start out as geniuses, and then allow our emotions to de-genius us. If you put good players into bad situations they usually turn bad.

Secrets to Beating America's 92 Million Irrational Poker Players

Common sense is not so common, and these common flaws are often consistent, predictable, and can be exploited for profit.

Illusion of control - the tendency for players to believe they can control or at least influence outcomes which they clearly cannot. NLH is 100% luck and 100% chance. An opponent can (suck out) win one hand 100% of the time. NLH is too random to be left up to chance-yet good results will have you rejecting alternative ways to play--Nothing fails like success. Doing things right the first time is an obscenity--If your game isn't broke, don't just break it, break it before the competition does.

Loss aversion - The pain of chips lost generally is much greater than the pleasure of a chips gained. Playars strongly prefer avoiding losses over acquiring gains ( Quit early when winning and playing marathon sessions when stuck or chasing---see also sunk cost effects. To win money over the long haul, you’ve got to win big pots. And to win big pots, you can’t be held back by this thinking error. You can't play a safe tight- is -right solid game and expect to win. You can't avoid crisis, you must be in a perpetual one that you create...but selectively picking your spots).

Bias blind spot - The left side of the brain will do the math. But the right side will "tag" it with a story. That story usually doesn't compensate for one’s own cognitive biases.

Choice-supportive bias - It's called "anchoring" remember one’s choices as better than they actually were. (Using the past to predict the future). There is never a certain prescribed way to play a hand, just a way to think about them. I've had racks of chips only to be felted 14 hours later because instead of an attitude of gratitude, I had the Mick Jaggar Tumbling Dice "Anything worth doing is worth overdoing"soundtrack playing.

Endowment effect - When I own something, I will tend to value it more highly. If I have to sell it, I will probably want to ask more than it is really worth. (Not being able to let go of QQ,AA,KK---rookie moves, and over betting the pot) There's the expected result, based on analysis, and the actual result, based on events. Poker is a game of situations---I've learned to thrown away Kings, Queens, and with a four card flush on the board, even two red Aces!

Confirmation bias - The Indians Rain Dance worked because they never stopped dancing! The Jeane Dixon effect-of making a few right predictions, and overlooking the false ones. Searching for information in a way that confirms one’s preconceptions. The delusions of reference--tells, lucky charms, hunches and coincidences.

Bandwagon effect - Do things because smart money people do or believe the same, like playing Helmeuth starting hands, or walking the painted line of Sklansky's Theory of Poker or Doyle's Super System. Related to groupthink, herd behaviour. That's what I find so cool about my game--being able to fire three barrels with squadush. (Thank you Poker Stars Sit and Go's)

Déformation professionnelle - the tendency to look at things according to the conventions of one’s own T.O.E., time on earth; assuming things that have similar traits are likely to be identical; forgetting any broader point of view. Past experience and feedback loops can make you Hola Lupe.

Disconfirmation bias -. We tend to use the information that is most handy when we make decisions/predictions. The path of least resistence mashed up with thin slicing.

Focusing effect - prediction bias occurring when players place too much importance on one aspect of an event; causes error in accurately predicting the utility of a future outcome.

Hyperbolic discounting - the tendency for players to have a stronger preference for more immediate payoffs relative to later payoffs, the closer to the present both payoffs are.

Impact bias -Our minds are suited for solving problems related to our survival, rather than being optimised for poker decisions. Players overestimate the length or the intensity of the impact of future feeling states.

Information bias - Seeking TMI, too much information, even when it cannot affect action. Try playing in the dark, or blind---With less information to be processed and filtered, the brain assigns higher priority to the information that it does receive.

Neglect of probability - the tendency to completely disregard probability when making a decision under uncertainty. Expected Value and Variance---weighing all the possible outcomes, weighting the more likely outcomes, and coming to a conclusion---play a big part in the decision process. There is therefore, never a certain prescribed way to play a hand, just a way to think about them

Mere exposure effect - the tendency for players to express undue liking for things merely because they are familiar with them. If it's not broke, break it!

Omission bias - The tendency to judge harmful actions as worse, or less moral, than equally harmful omissions (inactions).

Outcome bias - the tendency to judge things on their outcome, and not on their process. Over weighing and overeacting to a bad beat-- the most recent information or circumstances.

Planning fallacy - the tendency to underestimate task-completion times. It has taken me ten years to become an overnight Holdem success!

Post-purchase rationalization - the tendency to persuade oneself through rational argument that a purchase was a good value.

Pseudocertainty effect - the tendency to make risk-averse choices if the expected outcome is positive, but make risk-seeking choices to avoid negative outcomes.

Selective perception - the tendency for expectations to affect perception. (Gamblers Fallacy)

Status quo bias - the tendency for players to like things to stay relatively the same.

Von Restorff effect - Purple Cows and items that “stands out like a sore thumb” have a tendency to be more likely to be remembered than other items.

Zero-risk bias - preference for reducing a small risk to zero over a greater reduction in a larger risk.

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One Response so far.

  1. Grinder says:

    I think many good limit players have "Loss aversion" problems.

    I know I did when I switched and just in the last few thousands hands I have loosened up and "selectively" started to gamble.

    Still - I can not win may BIG pots (I seem to be in the wrong end LOL