August 03, 2005
Shuffle Up and Deal
Posted by Joshua Wright

Vic semi-seriously introduced a syllabus for a poker and the law course.  No less than John Bates Clark medal winner Steven Levitt has started a project analyzing online poker play in order to identify optimal poker strategy.  In the comments to Vic's post, Ted suggests that Levitt is likely to be disappointed because optimal poker play, holding the hole cards of the player constant, depends on things like tells (yes, even online), position, tournament or cash game, and signaling (not to mention the varying importance of these factors in different in say, limit vs. no-limit games).  For example, sometimes a player might want to make a call when he is behind, for the right price, simply to send the signal that he is not going to be bullied out of pots later in the game.  I agree with many of Ted's concerns about how useful the results will be to my own poker play, but am looking forward to the first large scale empirical analysis of poker play.

I would, though, like to add a chapter to the "Poker and the Law'" syllabus.  One critical question hovering over the behavioral law and economics literature is the extent to which markets might mitigate (or eliminate) the types of biases individuals exhibit in decision-making.  The poker table seems to be a great laboratory to get some data and insight on these issues.  Does repeat experience in the market operate to reduce these biases?  Do players respond to losses incurred because they overvalue certain hands (e.g. a pair of 3's in a ten-handed game)?   How robust are these biases to market interaction that threatens actual loss to the player's income?  Proof that consumer biases appearing to deviate from the rational choice model persist in actual markets over time would be the empirical foundation for any regulation based on the insights presented in this literature.  Poker seems to me to be a great place to find a few answers.

P.S. Ted really wants to know what stakes I play and what makes me a poker shark?  Well, shark was Vic's label (although I admit that I like the sound of it).  I would be more than happy to talk limits, credentials, or arrange a heads up match to satisfy your curiousity via email. 

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