So, the most damaging bias that can come up in poker, and I also think very often in life,
is what's known as confirmation bias.
So that's basically when you have like a pre-existing want to believe something, a desire for something
to be true, and you will overvalue evidence that confirms that belief and disvalue evidence
that disproves it.
And in poker that can be absolutely devastating if, say, you're in a big hand and a ton of
your chips are in the middle and your opponent has made a big bet and your hand is not that
strong, and you really, really want to believe that they're bluffing so that you can win
this hand.
And you'll then look for all these signs: “Oh, well, I saw that their hand look shaky
in that way and they seem a little uncertain,” look for all the evidence that could suggest
that they are bluffing, and then not really ask yourself those vital questions like, “Okay
well what evidence is there that they actually have a strong hand?”
And learning that skill is absolutely crucial to be a great poker player, and I think that
applies to many paths.
So if you're trying to make a big business decision: “Should I hire this new person
as a manager?”
and they're an old family friend and you really, really like them so you really do want to
hire them, you'll tend to look for all the signs that they could be great but dismiss
the perhaps overwhelming signs or the very strong signs that they're actually not the
right person for the job.
So it's very important to just remember that our brains are naturally inclined to confirm
what we really want to believe.
The status quo bias is whenever we catch ourselves saying, “Well it's always been done this
way” or “It’s worked for me like this in the past and this is my way of doing things”—that's
the status quo bias rearing its rather ugly head.
And what this means is that we have a tendency to not want to change our methodology, perhaps
change the process with which we do something because it perhaps worked sometime in the
past or we like doing it that way.
And in poker I remember I used to catch myself falling into that, I had like a style of play
that had worked for me a number of times and I would over rely on that and not update my
playing style based upon the table that I was at because perhaps I didn't enjoy it as
much or I found it more scary, for example.
And the same thing can apply to us in life.
The important thing there is to just be aware of the bias and look for situations where
you could be using it to justify staying in a situation that you're a little bit scared
to change.
Another classic one that comes up in poker is the sunk cost fallacy where, again, you'll
have a lot of chips, perhaps almost all of your stack is in the middle and yet you are
85 to 90 percent confident that you have the worst hand and that putting another chip in
the pot is probably not a good idea, but we'll often go to ourselves, “Well I've gone this
far, I've put this much in I might as well see it through to the end.”
But if you have very strong information that actually from this point onwards putting more
money in the pot is a bad idea, then you shouldn't.
But we have this belief that while I've put this much time in or this much effort that
we should continue on.
In poker whenever a new card comes out, even though historically you've put in a lot of
money into the pot, when that new information comes out that's an entirely new situation,
what's happened before in terms of how much money you've put in is actually largely irrelevant.
And the same thing applies to if you're investing in a business, be it time or money, when no
matter how much you've put in over the last few years, let's say if new information comes
out that this market is shrinking, some like legislation has been passed that's going to
make it even harder to proceed, then you have to largely ignore the decisions that you made
yesterday or before you got that information.
You're in an entirely new situation and you have to evaluate it with all the information
that you now have available.
Yeah, it's interesting to observe sort of the difference in emotion you can have when
you end up in a very similar situation.
So for example, I had 100,000 chips, I'm in a big tournament and I have 100,000 chips
and I lose a big hand and I go down to 50,000.
And then if I compare it to I'm in the same tournament and I had 25,000 chips, I double
up my stack and end up with 50,000.
So these are two different situations.
I have the same number of chips but I feel completely different between the two.
And those differing mindsets—in the time I've just doubled up I'm feeling great I'm
like “Wow I'm up to here now let's see where we can go,” whereas I've halved my stack,
I'm feeling despondent, I was like “Man I had this many before.”
And so often you'll end up playing badly from this point and playing great from this point,
and yet it's stupid because actually practically you're in exactly the same situation in both.
So poker teaches you to detach yourself from how you got there and just going, “Okay
this is my situation right now, what's the best procedure moving forward?”