The recent thread on gambling and financial markets reminded me of a conversation I had last week with Josh Wright, a George Mason lawprof who is also a bit of a poker shark.
I think it would be possible to teach a great seminar on Poker & the Law. Not having anything to do with the laws that regulate gambling. Rather, I'd use poker concepts to explore issues in law and economics. Having trouble laying down pocket kings with an ace on the board? Welcome to the endowment effect. Has the gal on your left check-raised you one too many times? Let's talk about the importance of reputation and repeat play. I could imagine a whole syllabus:
Week 1: Efficient Markets. Is poker gambling? Is it a game of chance, or skill? How does this compare to investing? Does your answer depend on the skill of the investor, the efficiency of markets, or both?
Week 2: Paternalism. Should we let bad poker players keep playing? How do table limits screen out bad players? How do these limits compare to "accredited investor" rules?
Week 3: Staged Financing. Why is position so important in poker? How much is the button worth? How can you extract information from your opponents, and how do you maximize the opportunity of being the last to act? How does this compare to staged financing in VC deals?
Week 4: Signaling. Why is it important to defend your blinds? How does this compare to the early stages of a negotiation?
Week 5: Endowment Effect. What makes people hold on to hand that they should lay down? Do people tend to underreact to new information? Why are pocket pairs so hard to fold? How do markets take advantage of behavioral mistakes?
Week 6: Impact Bias / Salience. Why does everyone have a slew of bad beat stories at their fingertips?
Week 7: Norms. Why, at low-limit tables, is raising before the flop frowned upon?
Week 8: Taxation. How does the table rake compare to taxation? Is the rake noticeable or hidden?
Week 9: Taxation, continued. When you tip the dealer, is it taxable to the dealer? Is it deductible, if you are a professional poker player? How does this question shed light on whether other "gifts," like blog tipjars, are taxable to the recipient?
Week 10: Taxation, continued. When you win a big pot, is that income? What if you don't cash in your chips, but keep playing? What if you leave them in a lockbox overnight? What are poker chips really worth, and what does this tell us about the realization doctrine? Cf. Zarin.
Week 11: Marginal Utility of Wealth. In tournament play, why do big stacks have such an advantage?
... you get the idea. I am semi-serious about this. Many lawyers have good instincts as poker players, and a course like this could leverage that knowledge into a base of law and economics knowledge. But I'm not sure my senior non-poker playing colleagues would embrace it so quickly. (I could probably count on Bainbridge for support.) Of course, significant poker experience would be a pre-requisite. These days I think it's safe to say that more law students have significant poker experience than, say, take a course in corporate tax or regulation of financial intermediaries.
The course also might have limited appeal for women. Although there are some strong high-profile women players, the game remains overwhelmingly male.
The best part of the course: we could do a field trip to Vegas. (Good luck squeezing that one by the Dean.)
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