So, the most damaging bias that can come up in poker, and I also think very often in life, is what’s known as confirmation bias. So that’s basically when you have like a pre-existing want to believe something, a desire for something to be true, and you will overvalue evidence that confirms that belief and disvalue evidence that disproves it. And in poker that can be absolutely devastating if, say, you’re in a big hand and a ton of your chips are in the middle and your opponent has made a big bet and your hand is not that strong, and you really, really want to believe that they’re bluffing so that you can win this hand.
And you’ll then look for all these signs: “Oh, well, I saw that their hand look shaky in that way and they seem a little uncertain,” look for all the evidence that could suggest that they are bluffing, and then not really ask yourself those vital questions like, “Okay well what evidence is there that they actually have a strong hand?” And learning that skill is absolutely crucial to be a great poker player, and I think that applies to many paths. So if you’re trying to make a big business decision: “Should I hire this new person as a manager?” and they’re an old family friend and you really, really like them so you really do want to hire them, you’ll tend to look for all the signs that they could be great but dismiss the perhaps overwhelming signs or the very strong signs that they’re actually not the right person for the job. So it’s very important to just remember that our brains are naturally inclined to confirm what we really want to believe.
The status quo bias is whenever we catch ourselves saying, “Well it’s always been done this way” or “It’s worked for me like this in the past and this is my way of doing things”—that’s the status quo bias rearing its rather ugly head. And what this means is that we have a tendency to not want to change our methodology, perhaps change the process with which we do something because it perhaps worked sometime in the past or we like doing it that way. And in poker I remember I used to catch myself falling into that, I had like a style of play that had worked for me a number of times and I would over rely on that and not update my playing style based upon the table that I was at because perhaps I didn’t enjoy it as much or I found it more scary, for example. And the same thing can apply to us in life.
The important thing there is to just be aware of the bias and look for situations where you could be using it to justify staying in a situation that you’re a little bit scared to change. Another classic one that comes up in poker is the sunk cost fallacy where, again, you’ll have a lot of chips, perhaps almost all of your stack is in the middle and yet you are 85 to 90 percent confident that you have the worst hand and that putting another chip in the pot is probably not a good idea, but we’ll often go to ourselves, “Well I’ve gone this far, I’ve put this much in I might as well see it through to the end.” But if you have very strong information that actually from this point onwards putting more money in the pot is a bad idea, then you shouldn’t. But we have this belief that while I’ve put this much time in or this much effort that we should continue on.
In poker whenever a new card comes out, even though historically you’ve put in a lot of money into the pot, when that new information comes out that’s an entirely new situation, what’s happened before in terms of how much money you’ve put in is actually largely irrelevant. And the same thing applies to if you’re investing in a business, be it time or money, when no matter how much you’ve put in over the last few years, let’s say if new information comes out that this market is shrinking, some like legislation has been passed that’s going to make it even harder to proceed, then you have to largely ignore the decisions that you made yesterday or before you got that information. You’re in an entirely new situation and you have to evaluate it with all the information that you now have available.
Yeah, it’s interesting to observe sort of the difference in emotion you can have when you end up in a very similar situation. So for example, I had 100,000 chips, I’m in a big tournament and I have 100,000 chips and I lose a big hand and I go down to 50,000. And then if I compare it to I’m in the same tournament and I had 25,000 chips, I double up my stack and end up with 50,000. So these are two different situations. I have the same number of chips but I feel completely different between the two.
And those differing mindsets—in the time I’ve just doubled up I’m feeling great I’m like “Wow I’m up to here now let’s see where we can go,” whereas I’ve halved my stack, I’m feeling despondent, I was like “Man I had this many before.” And so often you’ll end up playing badly from this point and playing great from this point, and yet it’s stupid because actually practically you’re in exactly the same situation in both. So poker teaches you to detach yourself from how you got there and just going, “Okay this is my situation right now, what’s the best procedure moving forward?”