Hedging

Might still have another post or two left to file under the “poker’s precursors” heading -- at the very least I’m going to do an epilogue recapping those games and adding a few other thoughts regarding them. Today, though, I’ll just pass along this short poker-related item from National Public Radio, a segment appearing earlier today called “Hedging Their Bets: How The Pros Diversity Their Poker Portfolios.”

Clicking the above link gets you to the short audio clip as well as a transcript of the report. Basically it’s just sharing to a non-poker audience the phenomenon of players buying pieces of each other in tournaments, presenting it as an alternative way to “invest” besides simply paying one’s own entry fees and trying to eek out a profit.

Poker pro Derek Wolters is featured as the investor, describing in particular his having played and busted the 2012 World Series of Poker Main Event while also buying pieces of 16 other players in the tournament. One of those Wolters bought pieces of turned out to be Jake Balsiger who went onto finish third for a nearly $3.8 million prize -- good for almost $600,000 for Wolters.

“Are you a better investor or a poker player?” asks reporter Keith Romer of Wolters near the end, who replies he thinks he’s better at investing while adding “there’s not that many people who do as much investing as me.”

The piece does a nice job presenting the phenomenon of buying action, with the analogy of this being a way to “diversify” a “poker portfolio” helping get the idea across. The piece might give the impression that tournament players selling/buying action is somewhat new, when obviously it isn’t.

It also perhaps suggests misleadingly that buying pieces of others is a better investment strategy than playing oneself, with the bonanza Wolters happened to hit with Balsiger making it seem he exerted some kind of skill or strategy with his investments that was better constructed than the strategy he employs at the poker tables. That could well be true, but in just over three minutes there wasn’t a lot of space to give his two methods of investing a thoughtful comparison.

Finally, I can’t help but think how at least a few non-poker playing listeners might wonder a little about the ethics of players buying and selling each other’s action while also competing against each other in the same event. It’s an issue -- usually a non-issue -- with which those of us close to that world are very familiar, but from the outside it has to seem a little strange. That is, buying percentages of others whose success or failure is not unrelated to your own, not to mention the more direct possibility of collusion that always exists as a possibility when players who’ve bought pieces of each other happen to meet at the same table.

Describing the practice as “hedging” fits in one sense -- by buying up pieces of others, players do give themselves extra chances to win should they themselves lose. But are they “limiting their exposure” (as hedging is normally described) or increasing it? Just as poker is a more complicated game than it might appear from the outside, so, too, is buying action a more complicated investment strategy than the piece perhaps lets on.

I liked the piece, but then again I’m not sure. I want to hedge.

Image: $100 bills in $10000 straps, stacked in a pyramid, public domain.

Bracing for a Boom of Dragon Babies

Was in the car today when I happened to hear I. Nelson Rose talking the Wire Act and the future of online gambling in America on “Here & Now,” an NPR show.

Nothing we haven’t heard or read before, particularly if we have been keeping up with the various state-level developments that happening in the wake of that December memo from the Department of Justice noting that the Federal Wire Act of 1961 applies strictly to sports betting (and not other forms of gambling). Or if we happen to follow some of what Rose has been writing about over on his Gambling and the Law blog of late.

Still, it was interesting to hear both the questions and Rose’s answers, and perhaps notable to consider that NPR saw fit to give it a quarter-hour’s worth of time to discuss. You can listen to the segment online here.

When Rose was done, the show then segued to a segment on the Chinese New Year which begins today.

“Here & Now” did a good job keeping me from changing the channel, initially by introducing the segment with Warren Buffett performing “I’ve Been Working the Railroad” on the ukulele. Apparently Buffett’s company owns the railroad operator Burlington Northern-Santa Fe in China, and more than a billion Chinese travel during the Lunar New Year holiday period, including many by train. The song was part of an advertisement.

I didn’t change the channel after Buffett was done, though, because I was intrigued by the host Robin Young explaining how Asia was “bracing for a boom in dragon babies.” The funny-sounding phrase brought to mind fantastic, B-movie scenarios, but in fact Young was referring to how the Year of the Dragon (which starts today) is widely considered by the Asian countries that follow the Chinese calendar to be the luckiest of the twelve in the cycle.

Thus have many families been carefully planning to have children during the current year, or “dragon babies.” The segment went on to share quotes from a Hong Kong couple talking about children born during the Year of the Dragon being both smarter and luckier.

Hong Kong’s medical system is in fact being put under extra strain to accommodate the extra births (about a 10% increase). The educational system also feels the effect of there being more “dragon babies” than children born in other years, although those effects aren’t felt until a few years later when those children start going to school. “Dragon babies may not receive the same quality of education as children born in other years,” commented a Hong Kong University professor.

In other words, one might argue that it is in fact less advantageous, practically speaking, to be a “dragon baby” than not, since you could face issues initially with regard to your birth and care, then later in terms of the education you might receive.

The segment (which you can listen to here) got me thinking a little bit about how superstitions in poker -- such as coveting lucky hands or seats or the like -- can sometimes have real, practical consequences on game play. Or, to look at it from the other direction, how others’ apparently irrational predilections can affect the fortunes of the logical-minded trying to coexist and/or prosper in their world (or at their table).

Meanwhile, if there isn’t already a band named the Dragon Babies, I’m grabbing that one right now. Fire-breathing power pop is what we’ll play.

Brace yourselves.

People Have Got to Know Whether Their President Was a Poker Player

Heard something on National Public Radio on Monday -- a reference to poker, actually -- and meant to pass it along here but got distracted by other items this week. It was the afternoon interview show “Talk of the Nation,” hosted by Neal Conan. He had Ron Howard on to talk about his new film, Frost/Nixon, which comes out today.

I’m curious about this film, based on the riveting play by Peter Morgan which dramatizes the famous series of interviews the ex-president gave to David Frost on PBS back in 1977. Am more interested, actually, to see the new DVD that just came out this week titled Frost/Nixon: The Original Watergate Interviews that compiles footage from the actual interviews, and I believe also includes some added commentary by Frost regarding the interviews’ historical significance.

In any case, Howard was interesting enough talking about Nixon and the unprecedented nature of the interviews. They went on for 28 hours, shown on several nights during the spring of 1977.

Toward the very end of the conversation, Howard says how “it’s kind of interesting to me that he [Nixon] struggled so much with television throughout his career.” Howard then relates the much-told story of the first 1960 presidential debate between Nixon and Kennedy, the one in which Nixon and his “five o’clock shadow” did not fare well on television. Most who watched the debate apparently felt Kennedy had won hands down, while those who listened on the radio tended to favor Nixon.

Says Howard, “the thought that he [believed he] could rehabilitate himself through a series of lengthy interviews again . . . reflects the complexity of the guy, maybe his hubris, or something.” The problem, though, according to Howard, was that Nixon “was not necessarily a very good liar.”

“His face reflected whatever he was feeling, and you can see when he’s uncomfortable. You can see when he is forcing a laugh, or when he’s angry. And I think those around him were always kind of on eggshells knowing exactly how he felt, whatever he was saying, because, you know . . . he was probably not a great poker player.”

“Probably not,” replies Neal Conan with a chuckle.

An interesting point, but, in fact, Nixon was by all accounts a terrific poker player. Indeed, of all the U.S. presidents his reputation as a player ranks near or at the top of the list.

The story of Nixon’s poker-playing exploits has been told many times in many places -- how he learned draw poker as a Naval officer during World War II, how he routinely crushed his fellow officers, earning somewhere around $6,000 in two months while posted on a ship in the Pacific, and how he financed his first political campaign (his run for a U.S. House seat in 1946) with his poker winnings.

As he ascended up the political ladder, Nixon gave up poker and whenever asked about it always tried to minimize his prowess at the game. In his autobiography, Nixon talks a little about poker, pointing out how he learned eventually “that the people who have the cards are usually the ones who talk the least and the softest; those who are bluffing tend to talk loudly and give themselves away.”

Having such a background -- and understanding of bluffing -- makes it all the more intriguing to think about how unsuccessful Nixon was at lying his way out of Watergate. Another example of the “complexity of the guy,” or, more likely his “hubris.”

But Nixon was a good poker player, let there be no doubt of that. And his example illustrates something most of us who play already know. While one’s poker skills certainly have some relationship to how a person acts (and interacts) away from the table, being a good poker player doesn’t necessarily mean one is going to be good or successful in other areas of life.

(Incidentally, that post title obviously alludes to a famous Nixon line, as I’m sure you noticed.)

Numbers & Psychology

Lots of news these days about the current mortgage crisis. Heard yet another story on NPR’s Morning Edition today about it, after which came a interesting little report about a recent study conducted by a couple of Cornell University researchers concerning the attitudes of prospective home buyers.

The study looked into how home buyers tend to respond to asking prices. Specifically, the researchers wanted to figure out whether or not it mattered to buyers if the price was listed as a rounded-off figure -- say $680,000 -- or a non-rounded off figure like $682,417.

After conducting some tests, the researchers concluded that buyers have what they describe as a “built-in bias in favor of precise numbers.” (They kept referring to non-rounded-off numbers as “precise” in the report, although I think one could argue the term is not necessarily being used accurately here.) That is to say, the buyers were more likely to view a rounded-off number as higher, and thus were more inclined to buy the home with a non-rounded off price tag.

In their conclusion, the researchers decided this bias in favor of non-rounded-off prices is a vestige of our retail shopping experience. When we shop at the local hardware store and see an item priced at $9.02, we instinctively assume the price reflects some sort of savings to the consumer. Therefore, as the reporter explained, “when people see houses with precise numbers, somewhere in the back of their minds they think ‘discount shopping.’”

The segment concluded with a representative from a New York real estate company expressing skepticism about the researchers’ findings. According to her way of thinking, a non-rounded-off price tag wouldn’t necessarily be met with enthusiasm by some buyers. Indeed, the odd-looking figure might give the buyer pause since, as she put it, the price “would seem a little strange.”

You can probably guess where I’m headed here. This is a poker blog, after all.

Just so happened that right after I heard the NPR story I got out the iPod-like device and listened to the March 25th episode of PokerRoad Radio (with Brandon Cantu). At one point about halfway through the show, the hosts engaged in a brief digression concerning bet amounts. Gavin Smith talked about how he had been experimenting with differently-sized raises during the first day of the WPT World Poker Challenge, betting 225, then 275, etc.

That led Joe Sebok to make a comment about players online betting strange-looking amounts like 2,222 and how it makes him “want to go through [his] machine and punch them in the face.” Ali Nejad suggested that response was precisely why people make such odd-looking bets -- it puts opponents on tilt. (Sebok denied the bets actually affected his game.) “We’re anal. We want round numbers,” argued Nejad. Thus do some of us object when the bets come out all weird-looking.

With regard to that idea that we “want” round numbers, the Cornell researchers did point out how the non-rounded-off numbers “momentarily confuse” consumers, and while they surmised home buyers ultimately overcame that confusion to conclude the prices were favorable, the N.Y. real estate company rep suggested that confusion produced a different consequence, perhaps even turning off the prospective buyer.

We’ve all encountered that rogue at the poker table who keeps betting weird, hard-to-explain amounts. The bets usually come as the first raise on a given round, e.g., it is preflop, the blinds are 50/100, and someone open bets 333 or something. Such a bet certainly can “momentarily confuse” the table. Such a bet can also give the bettor a crazy-seeming image (possibly part of the plan).

Additionally, the non-rounded-off bet might be said to produce a practical consequence, namely, it makes it more difficult (for most of us) subsequently to calculate pot odds. Have talked more than once this week about my own struggles to calculate on the fly my “equity” in a given hand. Such problems can be even harder to solve when we ain’t dealin’ with easy-to-manage, round numbers.

In any event, I think I share the N.Y. real estate rep’s skepticism about the Cornell researchers’ conclusions. I don’t think the non-rounded-off price tag encourages buyers all that much.

I know it doesn’t work that way at the poker table, anyway.