Games of Chance, Analytics, and Life

I’ve come to notice over the past few years an interesting overlap between those interested in analytics and those interested in gambling. I’ll be the first to admit that I have a long-held aversion to gambling, and at one point actually took vows that prohibited it as part of a mindfulness practice. (They’ve since expired, but I still haven’t participated.) However, I’ve been conducting an inquiry into why this overlap exists, which has led me down an interesting psychological and intellectual pathway worth detailing.

The common theme among many analytics professionals whose work I respect has been an interest in poker, a game of chance, skill, psychological profiling of self and others, good old fashioned razzing your opponents, and calculated risk, among other things. As I thought more about this, I began to see where this dovetailed with both key focuses of an analytics career, as well as an approach to life in general.

Part I: Chance, Skill, and Calculated Risk

Many of us have come from or at some point worked in the world of startups, whether that be marketing technology companies, early employees of the major vendors, smaller agencies, or otherwise. To succeed in this world requires a level of risk-taking and openness to experience that not everyone possesses, with no guarantees of success. Those startups that bend the odds in their favor do so because of factors such as timing of their product launch, the state of the market/competition, resonance with users, the image the company projects, and, sometimes, the personal charisma of the founders and/or spokespeople. Additionally, stock options, often offered to early employees, are themselves a gamble. So much of this is “right place, right time” type of luck, but a percentage of it is skill. VC firms invest in a portfolio of companies, expecting many of them to fail, but making up for it with a few outsized successes.

To succeed in poker requires a similar combination of factors. There are mathematical odds that can be calculated at every step, but there is a human factor that can bend the game in a particular direction. Players that succeed do so because of factors such as the relative inexperience or exploitable qualities of others at the table (state of the market/competition), ability to stay multiple steps ahead and project what others might do (which translates to building an effective user experience, as well as an effective company), and an ability to control how others see them (image/charisma). Ultimately, however, the game is played against the unforgiving master of probability combined with human psychology, which can create winner’s tilt (startups that are unicorns due to some chance factor who then go on to risk everything and lose it all), or bad tilt (startups that have a hard time acquiring customers, acquire a bad attitude instead, and end with the founders throwing in the towel and/or selling the company in a fire sale).

(For those unfamiliar with these terms, you can read further about understanding tilt and avoiding tilt.)

It’s easy to see why someone willing to gamble on a startup (or willing to enter a field that is fairly new and constantly changing) would be willing, able, and interested in literal gambling.

Part II: Psychological Profiling

To succeed in the corporate world requires self-knowledge, as well as an understanding of how to interact with varying personalities and groups. This is actively encouraged, particularly as one approaches the executive levels. The vast array of coaching, personality inventories, and team building boggles the mind (and accounts for a very large industry). There is nothing wrong with this, as there’s value for business and for life in having a realistic assessment of one’s own strengths and weaknesses, as well as how those interplay with those of others. However, this can quickly veer into unproven methodologies, the poppiest of pop psychology, etc.

Skill in poker also involves quite a bit of psychological profiling. As players advance, they are encouraged to assess the others at the table in terms of where they’re from, their tells, their appearance, their demeanor, etc. This can translate into an intuition for how they might behave or perceive the actions someone else takes, which can be exploited for gain. The gain in poker is taking someone else’s [real or theoretical] money, whereas the gain in business is getting others to work well with you. It can also, however, translate to stealing customers from a competitor when a crack is discovered in the façade of their product, which brings us to our next point.

Part III: Razzing Your Opponents

Many companies, particularly smaller ones but some larger ones as well, create a bond among their employees over outfoxing the competition. Any misstep by a competitor is celebrated and viewed as an opportunity to make fun of them (usually off the record), pursue that company’s frustrated clients with the promise of a better experience, or simply enjoy the schadenfreude. Sometimes this translates to the public space, such as John Legere’s direct tweets lovingly insulting other cellular providers in recent years.

Realistically, though, it’s also important not to underestimate the competition, or assume they’re not doing their due diligence on you as well. As humans, we tend to overestimate the amount of success due to our own skill and underestimate the role of luck. This relates to hindsight bias and hyperactive pattern detection. (Very interesting reading the The Atlantic on this phenomenon in general, and in The Sydney Morning Herald as it applies to poker and the stock market.)

In poker, putting others on tilt by finding their buttons is encouraged. Knowing them better than they know themselves and not letting them get comfortable are real strategies. Here we find something likely to be familiar to our aforementioned early startup employees: projecting a larger-than-life image and needling the competition. Brings to mind Salesforce’s early days of staging fake protests and commandeering taxis at competitors’ events.

Part IV: An Approach to Life

So, where does that leave us? What if one isn’t interested in putting real or imaginary money on the line, but finds these concepts fascinating? You might be someone who gambles with their life, which is actually all of us. I don’t mean in the sense of risking death per se, but we all take calculated risks every day (which goes without saying during COVID-19 especially).

To assess our risks and life choices requires the following:

  1. An understanding of cognitive biases
  2. Mindfulness of our thoughts
  3. Realistic odds calculation (e.g. understanding of real-life probability)
  4. A decision to act

These are solid life skills I don’t hesitate to universally recommend. If poker gets you there, great. My cautions are 3:

  1. The obvious risks of financial ruin and addictive behavior. If you’re struggling with these, there are resources like this one, which includes a great chart further down on how to satisfy the same urges that cause problem gambling, as well as organizations on the topic.
  2. The risks to one’s worldview. What do I mean by this? I’ll use the example of when I did a fair bit of karate at one point in my life. This caused me to view every public encounter from the perspective of which escape routes I had and which moves I could pull if someone came at me from various angles. When you have a hammer, everything’s a nail. Similarly, if you view life from a poker perspective, it’s a zero sum game, where intentions conflict and players don’t cooperate around a common goal. “But isn’t life actually like that, Anne?” Not necessarily, though game theory is interesting and includes more than this approach. I find Stephen Covey’s book The Third Alternative an interesting perspective as well if you want to get away from zero-sum thinking (concept here, book here).
  3. The motivation that gets you to the game. If it fulfills a need for you and doesn’t cause problems in your life, all the better. It’s important to be realistic about what brings you to the table. I’ve seen a pattern where people sign up to break themselves against the odds at times when the rest of their life has gotten out of control. Games can provide a controlled microcosm in which to play out our psychological tendencies, and can be an expression of avoidance or desperation. They can also be a fun diversion.

Overall, my inquiry has led me to a deeper appreciation of the parallels, life skills, and complexity behind the game. I don’t know if I’ll ever play personally or not, but I’ve learned a lot toying with these ideas. If you have experience with these areas, feel free to share in the comments.

Additional articles of interest:

How I Used Professional Poker to Become a Data Scientist

Psychology and Poker

Hold or Fold – Playing Your Big Data Hand to Win

What UTM Tags and Poker Have in Common (funny video)

One thought on “Games of Chance, Analytics, and Life”

  1. I enjoyed your article! How do I say this… I like your mind. You captured poker realistically, so it makes me wonder how you’ve captured it this well without hands-on experience!

    I also have an aversion to gambling. I never play house games where I am not favored. Just poker. Poker is about 90% luck, but if you have a strategic edge, understand your standard deviation, and exercise bankroll management, you can nearly remove your “risk of ruin” as its sometimes called. It is certainly a roller coaster, but I have played for over 20 years and never had a losing year, and almost never had a losing month when I played daily. (I was semi-pro for a while.)

    FWIW my (possibly biased) takeaway is that poker does not create gambling addicts. I’ve spent a lot of time in seedy casinos surrounded by what I like to call the degens. Slot and house game players, burning their money away with somewhere between a -2% and -20% expected value (EV) per action. These same people don’t tend to gravitate to poker. And when they do, their reckless behavior eventually causes them to lose so badly that they return to the slots on their next visit. And that makes sense, because their poker EV is even worse than their slots EV because of lack of self control and an appreciation for the finer points of the game.

    I had a friend with the itch, who was getting into sports betting, which is very difficult to beat. I taught him poker. It
    worked for a while but he returned to sports betting and lost a lot of money. Poker didn’t satisfy his desire to gamble like the negative EV games did.

    You’re not wrong that it is often encouraged to put other players on tilt, or push their buttons. But it is just one of many ways to play the game and certainly not required for success. Many players would consider this angling, which is to say its not illegal but is frowned upon. But that’s just the thing about poker, its a human game that can be played creatively, including interpersonal tactics such as this. All part of what makes it so compelling for me. An opportunity to use all sorts of life skills, and to hone them.

    But in summary, you may not be interesting in waging real money due to a distaste for gambling, but as I like to say,
    you have to pay for your education.

    Liked by 1 person

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