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Check Your Biases Like a Poker Player: Three Common Cognitive Pitfalls in Decision-Making, with Liv Boeree, International Poker Champion
Confirmation Bias
There are some really interesting biases that I as a poker player have to continually remind myself that I can fall victim to. 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. That’s when you have 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’s made a big bet. 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 the signs – “oh, I saw that their hand looked shaky, and they seem a little uncertain” – all the evidence that could suggest that they are bluffing, and then not really ask yourself those vital questions like, “Ok, well, what evidence is there that they actually have a strong hand?” And learning that skill is absolutely crucial to being a great poker player.
Say you’re trying to make a good business decision – for example, should I hire this new person as a manager? And, say, they’re an old family friend and you 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 perhaps the the very strong signs that they’re actually not the right person for the job. So it’s very important to remember that our brains are naturally inclined to look to confirm what we want to believe.
Status Quo Bias
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 it’s rather ugly head. And what this means is we have a tendency to not want to change our methodology, perhaps change the process with which we do something, because it’s 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 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.
A way status quo bias comes up in life is when we’re in a relationship. Sometimes there’s a lot of information coming in that, actually, this relationship isn’t that great – you’re not that happy. But we as humans have a very strong aversion to change because we’re uncertain what it might be in the future. And even if you could get perfect information that, actually, if you weren’t with that person you’d be much happier, we often find it so hard to just make that jump and leap into that new uncertainty. So 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 little bit scared to change.
The Sunk Cost Fallacy
Another classic one that comes up in poker is the sunk cost fallacy. Again, you’ll have a lot of chips, perhaps almost all of your stack is in the middle, and yet you’re 85% – 90% confident that you have the worst hand. Putting another chip in the pot is probably not a good idea, but we’ll often go to ourselves, “Eh, 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, “Well, I’ve put this much time in, or this much effort”, that we should continue on.
The same thing applies to investing in a business, whether it’s time or money. 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, or some legislation has been passed that’s going to make it even harder to proceed, 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.