Cognitive biases and how knowledge about them can help a poker player

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Cognitive biases and how knowledge about them can help a poker player

Hey guys,

I want to start a discussion here about aspects related to behavioral economics - especially a phenomenon called cognitive biases.
I am not sure it fits 100% into mental forum but I think in large degree it does. Knowledge about behavioral economics and cognitive biases is in my opinion very beneficial in many aspects of daily life and also in poker.

I became interested in that stuff while working on my master thesis which focused on explaining how cognitive biases and especially "status quo" bias influences business competition and why some succesful companies failed at some point. Let's start with some definitions:

Behavioral economics is kind of a different approach to traditional economics. Classic economics says that people or market participants always make rational and calculated decisions. Even if they make some kind of a mistake they instantly learn and correct bad approach. They always want to maximise EV of their decisions. That kind of ideal people are called "homo economicus". Of course this is not true. We are all driven by emotions and not always rational. The addition of psychology is most important factor that separates behavioral economics from traditional economy.

Cognitive bias on the other hand is a phenomenon when a person makes a decision which is not at all expected from a rational point of view. We are all biased but only few of us are aware of that! Why is that? Roots to cognitive biases can be linked to evolution. Our brains cannot process every information they receive so they are forced to make some generalizations which are of course biased (this is called heuristics). So combine those mental shortcuts made by your brain with other aspects like emotions, social influences and information noises and you have a recipe for being biased. Of course it's hard to avoid being biased since it's how our brains work but being aware of that is beneficial. It shouldn't be also seen as something bad.

Let's look at few example biases:
Mental accounting bias - we attribute emotions into money. Losing money earned by hard work is more painful than losing money we have won on a lottery. This is obviously a bias because from an economical point of view 1$ equals 1$ no matter how we earned it.
Representative fallacy - when calculating possibility of something occuring we often use limited informations based on our limited experience. We also don't account how representative our set of information is. This leads to searching patterns in potential random occurences.
Illusion bias - informations that we understand better are more often seen as true. If they are repeated often enough we see them as true even if we perceived them as false before.
Self-attribution bias - if we are succesful we attribute it to ourselves. If we are unsuccesful we try to find some external sources that are cause of failure.
Hindsight bias, retrospection bias - we believe that the negative occurence that already happened could have been avoided.
Legend effect - people underestimate statistical information and they overestimate descriptive information.
There is also a bias which relates to a fact that we put more attention into occurence of something rather than lack of that occurence.
Status quo bias - we prefer things to stay the way they are. We are scared of the unknown even if that unknown has a potential to bring us benefits which are far greater than the risk taken. There was a resarch made which concluded that potential benefits of breaking the status quo need to be atleast twice larger than the potential risk for people to make a move.

Status quo is connected with loss aversion. Let's look at an example:

Okay so with this example you can see that in Problem 1 you can either finally have 1500$ instant or have a 50% chance to win additional 1000$ and have 2000$ total.
In Problem 2 you can either lose 500$ and have 1500$ or have a 50% to not lose anything at all and have 2000$ total.
In theory people should have the same preferences in either problems. Now lets guess how people responded to those problems in a resarch?
Problem 1: 80% of people prefered option for an instant 500$
Problem 2: Most people preffered to gamble for a 50% chance to not lose anything
So this is loss aversion - faced with a prospect of a win we prefer smaller but sure win. When we are faced with a potential loss we prefer to take an EV- gamble.

How knowledge about that can help at poker?
Okay so besides knowing what drives financial markets and why your grandpa doesn't want to convert all her savings into bitcoins knowledge about biases can be helpful for a poker player.

I think that it can be helpful with dealing with tilt issues, being results oriented even things like analyzing statistics. It also gives insight into how other regs and fishes might think. We can start questioning our game and stop blindly following others. For example I see a tendency in many poker players to follow some players they perceive as good only by their winrate. But this winrate comes from limited sample so how we really know it's big enough to be not affected by luck? Worth thinking about. Also we can identify situations where we made some assumption which based on some limited sample. For example we made a bluff here and there and it worked few times and we think this play is great. But it's still limited sample so how do we really know? But our brains still tell us GO FOR IT :)

Here are some biases related to poker I have experienced so far:
1. When I feel I'm running hot I often feel the urge to end the session earlier to not lose what I have earned so far. And when I'm losing my instinct says to play longer to minimise losses.
2. When I am not sure about some play for example making a bluff or something and I do it and it ends bad in future similiar situations, I recall the one when I lost. I have an urge to not repeat that play even if I never really checked if it is correct or not. On the other way if I do something stupid and it pays off I sometimes find repeating that error.
3. I tend to remember times when I got bad beat and tend to forget when I suckouted somebody.

What about you guys? If my post interested you let's look for some more poker bias examples or ways how knowledge about them can be beneficial for us. Still lot's to explore! Also if you are interested in that stuff check out the book of Daniel Kahneman "Thinking Fast and Slow".

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