Percieved Value. Oder warum gewichten wir Verluste stärker als Winnings? [Englisch inside]

    • Pokermage2008
      Dabei seit: 04.10.2008 Beiträge: 6.784
      Hi Leute,

      Habe mir die Tage Gedanken zum Thema percieved Value gemacht und warum Pokerspieler Losses so viel stärker gewichten als Winnings, sowohl was den Wert angeht, als auch den Happiness-Ev dahinter. Rausgekommen ist dieser Artikel für meinen englischen Blog. Vielleicht interessiert es ja auch jemanden, würd gern bissi darüber diskutieren.


      Perceived Value in Poker

      In this blog entry, I wanna talk about an issue I have spent many hours thinking about.. I just couldn't wrap my head around it: the fact is, poker is just one big session.

      The questions I asked myself included:

      - Why do people tilt when they drop more stacks than usual?
      - Why is it that money won is perceived as less valuable than money lost?
      - Why is it so hard for people to stop a session if they are down?
      - Why do people feel like they "lost" money if they at one point in the session were up some stacks and then stopped the session breakeven?
      - Why in God's name is it that so many people quit sessions just because they won a certain amount of money in a short time?

      While some questions may have seemingly logical answers, I wasn't satisfied with the answers the forums and literature gave me. This bugged me until I learned about the "Prospect-Value Theory" while studying finance at University.

      "The Prospect theory [...] helps explain how loss aversion, and an inability to ignore sunk costs, leads people to take actions that are not in their best interest. The sting of losing money, for example, often leads financial investors to pull money out of the stock market unwisely when prices dip."
      Belsky and Gilovich (1999)

      Just a heads up: sunk costs are past costs (losses) that can't be recovered. Let's take for example the concept of paying blinds, we are forced to pay them and after posting them, this money does NOT belong to us anymore, therefore they are sunk costs There is nothing you can do about sunk costs, so logically it would be wise to ignore them.
      But here comes the catch: people are unable to ignore them. They always put those costs into their calculations. For example, people who invest in a stock that dropped in value since they bought it are more likely to hold on to that paper, just because they don't want to sell it and incur a loss. So they keep the stock and hope that it will rise above their reference point. Even if the expected value of keeping the stock is negative and the person knows that, his irrationality drives him to keep it―just because he values the chance of breaking even or better worth the likely loss.

      What implications does this have for poker? I think you can define tilt as a situation where you take a certain action that you would not have taken if you thought rationally. For now, let's ignore the reasons for tilt. If tilt is not acting rationally, than clearly tilt equals irrationality. We should know better, but we don't listen to our self. Why is that?

      Let's analyze the tilt induced by losing stacks in multiple bad beat situations in a short time. Jared Tendler (the mental coach and writer of the great book The Mental Game of Poker) thinks bad beat induced tilt occurs because we try to think rationally, but a part in our brain remembers every bad beat and suck-out and adds those situations to a stack of negative emotions. Because let's be honest: no one likes to lose money, especially to a donkey ;) . This stack of emotions will grow until tilt breaks out and, whether we're conscious of it or not, it blurs our clear thinking.. While I really like this way of thinking about bad beat induced tilt, I think there is more to it, mentally.

      What does this prospect value theorem say about poker? The reference point of the theory marks a point we choose for ourselves. Values over this point have a different utility to us than the values lower than our reference point.

      "Losses hurt more than gains satisfy; most empirical estimates conclude that losses are about twice as painful as gains are pleasurable." Hastie and Dawes (2001)

      Let's assume this is right. We can conclude that while winnings above the reference point are perceived as half the "pleasure,” losses are perceived with full "pain." This graphic displays this wonderfully:

      What could be a reference point for a poker player? For example, if a player goes all-in preflop with Aces and his opponent flips over AKs, then we know that he has about 88% equity. We know he should lose about one time out of ten. But still, we set a reference point at winning the whole stack. The player expects to double up. In our minds, we claim the whole pot to ourselves.

      Let's try to look on the math side of things.

      Stacks: 100NL, with 100BB effective stacks

      Reference point: $200 (+$100)

      Expected Value: $175 (+$75) (200*0,875)

      "Felt value real" : (If win: Money won $100. If lost: Money lost $100) --> win counts half, loss full. Therefore: (100/2)*0,88+(-100)*0,12 = $32

      "Felt value prospect theory": (If win, perceived: Money won $0. If lost: Money lost $200) --> win counts half, loss full. Therefore: (0/2)*0,88+(-200)*0,12 = $-24

      How can we interpret this? If we don't set a certain reference point, we would value this hand at + $32 , even though we just shipped all-in with AA. That's sick, but you can see how the higher perceived loss kicks in. In the second calculation, we set a reference point at $200. We expected to win. So if we do win, it doesn't add any happiness value—it just "is." On the other hand, if we lose, it has a huge impact. Even tough we only lose 12% of the time, this accounts for $24 lost.

      It is obviously not such a big impact in real poker playing, because we don't recall every hand separately in our brain. But, we unconsciously set a reference point every time we look at our graph or our cashier. This value is what we have. We want more, not less!

      So, basically, we can now say:
      - Winning is good
      - Losing is bad. Twice as bad.
      - We unconsciously set reference points at marks that we have (if winning) or marks that we had (losing)
      - We shouldn't do that if we want to become happy with poker

      If we want to get better as players, we have to improve our mindset. As we just saw, this could be theoretically easy, but our mind tries very hard to make us unhappy! A solution to this is to accept certain realities of the game. And Prospect Theory is undoubtedly one of those realities.

      I can only speak for myself, but after I saw the theory, the math behind it, and the implications it made, I thought about it, and then I tried to accept it. I really think this improved me as a player.

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