GTO Poker Theories -Goodhart's Law

When a measure becomes a target, it ceases to be a good measure. True in business, life and rakeback.

 

One of the real gifts poker has given me is that it has been a great jumping off point to learn things from other disciplines like economics, AI, psychology and Game Theory. So here is a series of articles where I bring some of the most interesting things I have learned from other subjects outside of poker which are applicable in this game we know and love.

Goodhart's Law is a commentary on the pitfalls of over-reliance on indicators or metrics as targets. Named after British economist Charles Goodhart, this law states: "When a measure becomes a target, it ceases to be a good measure."

In simpler terms, it suggests that when a specific metric becomes the primary focus for an individual, organization, or system, the relevance and efficacy of that metric can be compromised. This is primarily because entities being measured will adjust their behavior to optimize the specific metric being targeted, often at the expense of other valuable aspects of performance.

To illustrate Goodhart's Law, consider an example from the realm of education. Suppose a school's performance is evaluated solely based on the average grades of its students. The school, eager to improve its ranking, focuses all its resources on improving these grades. Teachers start 'teaching to the test' rather than promoting holistic education. Students are pressured to memorize facts rather than understand concepts.

Initially, the school's average grades improve dramatically, creating the illusion of success. However, over time, the quality of education suffers. Students may graduate with high grades but lack critical thinking skills, creativity, or a deep understanding of their subjects. In essence, the grade point average, initially a useful measure of student performance, ceases to be a good measure once it becomes the sole target.

Rakeback Pros

Most people will recognise examples of Goodhart's Law in their own lives and careers. Poker is no different and there are lots of examples we can point to.

Rakeback is perhaps the best example I can think of. There was a time when rakeback deals were so high that some players made a living from it alone. In some cases, they chased the infamous SuperNova Elite status level worth over six-figures in loyalty benefits.

While very profitable for those that managed it, often this would result in the player playing breakeven or even losing poker before rakeback. They would concentrate on the number of hours and number of tables, rather than whether they could beat the games by more. This hurt the game by having so many breakeven tight players at the tables and likely hurt the progress of the rakeback grinders overall. Not to mention it was just exhausting.

ICM or titles?

You also see this at big events like the World Series of Poker. Some players are so enamored by the prospect of winning a bracelet that they will make unprofitable decisions to get big stacks. ICM goes out the window and it's not uncommon for a bracelet-winning year to also be a losing year.

There have even been some cases where players chasing leaderboard titles end up losing overall. I personally came third in an online festival leaderboard after a very profitable start, but I barely broke even on the festival because I was re-entering everything with reckless abandon. I'd have been better off ignoring the leaderboard after that early big win.

Goodhart's Law is not just an economic principle; it's a cautionary note about the potential pitfalls of single-mindedly chasing metrics. It encourages a more holistic approach to evaluation, whether in businesses, government policies, or poker. It's a reminder that a singular focus on any one metric can distort the system it's meant to measure, thereby undermining the very purpose it was designed to serve.

What theories from outside of poker have helped your game? Let us know in the comments.

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