GTO Poker Theories - The Zeuthen Strategy
Sage advice about how to negotiate final table deals in poker tournaments from the world of Game Theory.
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 to this game we know and love.
The Zeuthen Strategy is a simple method for two parties to bargain fairly. Each side considers how much they would lose if no deal is reached, which Zeuthen called their “risk pressure”. At each turn, the party with the lower risk pressure makes just enough of a concession to balance the other party’s risk. This process continues until neither side prefers walking away to accepting the current offer.
This idea dates back to Sten Zeuthen in the early twentieth century and was later framed in game theory. Imagine splitting a cake: negotiator A and negotiator B each have their own idea of a fair share. Whoever stands to lose less by failing to agree proposes a division that makes the other indifferent between accepting and rejecting. Offers alternate in this way and gradually bring both sides to a point where neither wants to change the deal.
In practice, the Zeuthen Strategy shows that patience and good alternatives give negotiating power. If you can cope with a delay or have another option, you feel less pressure to settle quickly, forcing the other party to give more. Although real negotiations are often messier than theory, this model helps to explain why having strong fallback positions and a willingness to wait often leads to better outcomes in business talks, labour disputes or diplomatic discussions.
Final table deals
There is a direct poker parallel for the Zuethen Strategy, which is final table deals at the end of poker tournaments.
Quite simply, the player who cares the least or has the most options is likely to negotiate the best deal. An experienced player with an edge, and/or a huge chipleader, is not as concerned about locking up a big payday as an amateur who has not been in this position before.
This is why sometimes absolute crushers have negotiated better-than-first-place final table deals. They have been in this spot before, and they will again, whereas the amateur may not. The amateur stands to "lose" equity they think they are entitled to, or may never see again, so they take the worst of it.
If nothing else, appearing not to care about the deal as much as your tablemates is an asset when negotiating deals.
What theories from outside of poker have helped your game? Let us know in the comments.
