# The Principle of Diminishing Chip Value

• Sit and Go
• SNG

## Description

Understanding the real value of chips is one of the most important skills in SNGs and a key to understand crucial concepts like the Independent Chip Model. In this video you will learn why chips in SNGs have different value than in cash games and why you should distinguish between chip expected value and monetary expected value.

## Video transcript

The principle of diminishing chip value

In this video you will learn Why chips in SNGs have different value than in cash games, how to understand the real value of chips in SNGs And why y..

• #1

Hi All

Please enjoy the first video in our SNG Chip Value Series of Lessons - The Principle of Diminishing Chip Value

If you have any questions or comments please join the Discussion in the forum here:

Don't forget to study the lesson, take the quiz and do the exercises which come with this video
• #2

Nice explanation :)
• #3

Very nice! =)
• #4

Isn´t it true, that our \$EV in the last example is even lower than -2\$?
The EV of the call is clear, but our opportunity of calling is folding and the worth of our stack after a fold is higher than 10\$. Before this situation it was worth 10\$ but after this hand we are most likely up against just 6 or 7 opponents so that we are much closer to the money. with 6 Players left and 5 of these player have a stack of 1500 chips (inluding us) or stack should have have a worth of 15%-17\$.
• #5

It should be *including us and *15\$-17\$ ;)
• #6

@4 Hey, thanks for your feedback :).

Entire example's goal is to show that a given decision may earn chips, but lose money. In our example the decision we consider is a call. I agree that calculating monetary value of a fold is interesting and that it proves even more how wrong the potential call is, but that's not the point here. We don't need to show it here. I'd say even more - we don't want to show it here, as:
- it's not necessary to explain what we're trying to show,
- it might be too difficult and confusing,
- it's basically impossible without explaining entire idea of the ICM.

It doesn't make our calculation wrong, as we don't take folding into account at all, we just want to show one simple thing - calling earns chips but loses money.

When it comes to the value of the stack we put at risk (\$10) - it's all about having some reference point. For the sake of simplicity we've decided to show it in reference to the value of our stack before the hand is dealt. Of course, ideally we should take into account the fact that several players have gone all-in before us (so basically in reference to the value of our stack in the next hand), but again – it would make entire process super complicated and wouldn’t be possible without explaining the fundamentals of the ICM.

Strictly ICM-related examples will follow in the next 3 lessons :).

Hope you enjoy our new content, cheers :)
• #7

Nice vid , good explanation !
• #8

Isn't the cEV = (40% x 9030) - (60% x 1500) ?
• #9

@8 - actually, the calculation shown in the video is a shorter form of the following one:

cEV = 40% * 9030 + 60% * 0 - 1500

where:
40% - probability of winning
9030 - your stack if won
60% - probability of losing
0 - your stack if lost
1500 - chips you put at risk

Hope it helped :)
• #10