Neuropsychology of Poker (6) - Money Matters
Introduction
In this article
- Money as your motivation and driving force in online poker
- What problems can arise
- How you can free yourself from being drawn in by greed
Erwerbstrieb: You may already be familiar with this German term for the acquisition instinct (Taussig, 1915). It also denotes part of the reason why all of you started playing poker in the first place. Acquiring resources is not the only reason of course. Challenging yourself, genuine enjoyment of the game and mastering the skills required are some of the other attractions.
Money as compulsion
Your reasons for getting into poker are clearly diverse. However, ultimately, whether directly or indirectly, you are after the money. But just how much are you after? Is there a limit to your financial goals in poker? Do you have a set figure in mind before moving on (if that is your intention), or is the sky the limit?
At the “Lectures on Some Relations between Economics and Psychology” delivered at Brown University in 1915, notable professionals and scholars met to discuss the motivation for acquiring vast wealth. “Why some men [and women] seem to do so [strive for wealth without limit] is precisely the problem which we are trying to solve” (Taussig, 1915). Today, we have quite a few answers to that question. Furthermore, we understand the slip-ups and vices one can encounter along the way.
One of many ways to differentiate between humans is in terms of seeking sensations. High sensation seekers are prone to taking greater financial risks, including gambling. This subtype has a greater likelihood to engage in novel and risky experiences. They seek greater sensations than the average human being (Nocera, 1999).
While you have no problem putting hundreds or thousands of dollars into the middle with a 10% edge, those who seek fewer sensations might not qualify the risk as worth the reward, even when taking into account the affordability of potential losses. What you see as low risk would be deemed high risk by those who aren’t such thrill seekers.
Your sensation seeking tendencies are not the only relevant factor. The desire for wealth is an obvious attraction of online poker. As long as it does not turn into greed, it can be a positive influence. Greed however, has the potential to greatly hinder your productivity. You have probably heard from well-known players, that focusing on the money aspect of poker will hamper your decision making. This could not be more true.
Greed in poker will have you making unjustifiable and irrational decisions, both on and off the tables. An extreme preoccupation with your bottom line will take concentration and mental energy away from the most important facet of poker, playing your hand in the most profitable way possible. The more results-oriented you are, the more sensitive to the neurological influences of swings you will be.
When starting out it is very difficult not to be greedy. I was certainly no exception. However, over time you will become desensitised to the financial aspect, and either leave the game, or maintain and possibly improve your motivation by focusing on your progress instead. There are many other ways a strict focus on the money in poker can impede your growth and infringe on your happiness.
Just like investing, poker play involves many potential, emotion induced irrationalities and biases. Behavioural finance is a field of study analysing the psychology of human behaviour in financial markets. There appear to be many systematic inconsistencies between the rational and actual behaviour exhibited by humans when money is at stake.
Taking irrational and unjustifiable risks, reacting to unanticipated outcomes in debilitating ways, blaming results on your play or that of others when it’s actually just variance, are some of the frailties you exhibit.
This paradigm of behaviour is a tenet of Prospect Theory; a framework for decision-making in matters of risk or uncertainty. There are two processes involved. The first is editing and the second evaluating.
Editing refers to the practice of simplifying, organising and reformulating your options to make a decision. Evaluating is the value given to the different options to determine the highest-value decision. The problem with this inevitable mode of mental conduct is the biases involved. Namely, the value of a unit of currency changes depending on whether it is a gain or a loss. Also, the preceding gains or losses influence your behaviour.
A quick example in poker would be tilt-induced decision-making. Where the former is concerned, the possibility of gaining a stack does not have as much positive influence as the negative influence of a lost stack, especially when tilted. Let’s take a closer look at some of the biases you may encounter as poker players.
Heuristic Simplification
The underlying mechanism from which a lot of these biases arise is known as Heuristic Simplification. This refers to the shortcuts your brain uses when analysing information to reduce the complexity of a decision and to generate estimates. The main issue with this practice is that people think they are better decision-makers than they really are.
Your brain then seeks out information that confirms this belief. A quick example, the representative bias explains that the brain makes the assumption that things with similar qualities are alike. In investment, this manifests itself as people thinking that a good company is also a good investment, and that rising stock prices mean that the stock value will continue to rise in a bout of irrational extrapolation.
For you and as a poker player, this may manifest itself in the belief that players with an attractive graph are necessarily better players. Or, that certain players with similar preflop stats have similar playing styles. A mindset which is especially troublesome when applied to postflop tendencies. Of course the reality could be quite different. A nice graph could be a representation solely of certain bum-hunting practices. Furthermore, players with similar preflop stats could exhibit huge differences in their postflop play.
Another relevant bias is one that was mentioned in a previous article. Cognitive dissonance refers to the anxiety you feel when countering information which violates your current thoughts or beliefs. In poker, refusing to give a semi-fish credit for being able to make a certain type of play is one way you react to your dissonance. Either the player you deemed a fish is not as idiotic and incapable as you thought, or the play you are encountering is wholly irrational and in line with your initial expectations. These are two different conclusions which result in stark differences in the range that should be assigned.
Another example of dissonance is if you again refuse to re-qualify one of your plays. Maybe you took a line or made a play which was the most profitable option in the past but is not the correct play now. How you react to the resulting dissonance could have a dramatic influence on your bottom line.
Let’s move on to the familiarity bias, which states that people put too much emphasis on the familiar. This holds true for your poker play. How many times have you taken a line or made a play simply because that is what you are used to doing? This is the central problem with “auto-piloting”.
Taken further, this bias states that you are more likely to deem the familiar play as less risky than the alternatives. If you conclude at one point that a play is the most profitable, when it is actually not, and it is in reality a higher variance play, this bias can have some dramatically negative influences on your bottom line.
Mood and optimism are of course very important to your poker play. They are also a type of bias, possibly the most prevalent type in poker. When in a good mood, you are less critical when processing information. Thus a negative mood might seem to have some inherent advantages. However when applied to poker, a bad mood also renders you more sensitive to negative neurological influences, which then leaves you more prone to tilt and make irrational decisions.
In fact, interestingly enough, studies have shown that mood is so relevant in financial decision-making, that the weather can have a significant effect. For instance, it has been shown that people tip waiters/waitresses 50% more on sunny days. Interestingly, daily reports across twenty-six stock exchanges showed significantly higher returns on sunny days. This leads us to wonder whether the weather and time of day of your opponents in online poker can influence their play enough to add another line to your notes.
The final bias you should know about in this article (there are other relevant ones you can research if interested) is overconfidence, or “the ego trap”. This is at the core of a lot of human beings, especially when money is involved. Overconfidence is very prevalent in poker, especially if you are running well. Most poker players think they are better than they actually are. This way of thinking can also have you defining weaker players as weaker than they actually are. For example, many poker players want to believe that fish are inherently intellectually disadvantaged to some extent, when the reality is some of them are just looking to gamble! (Baker, 2002)
Going back to greed, a clear manifestation of its potential for destruction is the recent financial meltdown in the United States. If you aren’t familiar with what happened, a quick summary:
Greedy banks handed out a plethora of subprime mortgage loans to people who clearly could not afford the homes in question. The banks were investing in the greed and materialism of citizens to own something they could not afford. The hope was that housing prices would continue to rise, of course, they did not. The result was an economic devastation that influenced millions worldwide. Surely if something like this is possible, it is time to re-think your motivation and strive for change.
Buddhist psychology defines three main unwholesome psychological states. These are greed, hatred, and delusion. It goes further to state that these should transform into generosity, love, kindness, and wisdom. Most important for our purposes, is the Buddhist claim that the apparent cause for endless competition and injustice is internal; a manifestation of intentions.
This is contrary to central capitalist belief as defined by Buddhism. The beliefs at capitalism’s core are; “the next thing bought will satisfy you”, “you can never be too rich” and “he who dies with the most toys wins.” (Troisi, 2006)
The economy of Thailand is a good example of “sufficiency economics” which operates with Buddhist teachings in mind. Please consider that I am not making the claim that the economic practices of Thailand are necessarily the most productive, efficient, and wholesome. However, they are a step in the right direction to some degree (Troisi, 2006).
At the core of this system is the belief that having more does not necessarily equate to more happiness, and that past a certain level of material comfort, more wealth does not equate to more happiness. What better realisation then, to internalise the notion that success in learning and passion for the game and improvement are the true ingredients for success and happiness.
Conclusion
Separating your mind from the pull of greed and distancing yourself from the graph of your results will not only render you more robust and emotionally balanced, but may very well put you on the path to greater happiness. Rejoice in your freedom and the rest will simply fall into place, provided you remain disciplined.
I will leave you with this fable.
“A Cherokee legend states that one evening a man told his son about a battle that goes on inside people: “my son, the battle is between two wolves inside us.” The evil wolf is anger, envy, jealousy, sorrow, regret, greed, arrogance, self-pity, guilt, resentment, inferiority, lies, false pride, superiority, and ego. The good wolf is joy, peace, love, hope, serenity, humility, kindness, benevolence, empathy, generosity, truth, compassion and faith. The son thought about it for a minute and then asked: “Which wolf wins?” The old man replied: “The one you feed.” (Troisi, 2006)
Good luck at the tables and beyond!
Baker, H. Kent, and John R. Nofsinger. "Psychological Biases of Investors." Financial Services Review 11.2 (2002): 97+. Questia. Web. 14 Apr. 2011.
Nocera, Joseph. "Money, Greed and Risk." Washington Monthly Sept. 1999: 52. Questia. Web. 12 Apr. 2011.
Taussig, F. W. Inventors and Money-Makers: Lectures on Some Relations between Economics and Psychology Delivered at Brown University in Connection with the Celebration of the 15th Anniversary of the Foundation of the University. New York: Macmillan Company, 1915. Questia. Web. 16 Apr. 2011.
Troisi, Jordan D., Andrew N. Christopher, and Pam Marek. "Materialism and Money Spending Disposition as Predictors of Economic and Personality Variables." North American Journal of Psychology 8.3 (2006): 421. Questia. Web. 16 Apr. 2011.
