Sunday, August 18, 2013

Recognizing poker as a game of skill

Apparently, some people think poker might not be a game of skill.  Even important people, like prosecutors and politicians.

In that light, academics Steve Levitt and Thomas Miles recently published a working paper that proves the role of skill.  In a nutshell, they noticed that the highest-ranked poker players (as determined before a tournament) win a lot of money, while everyone else loses a lot of money.  

I haven't actually read the paper, because as a non-academic non-journalist non-resident-of-a-developing-country, it would cost me $5.  But .. well, yeah, of course.

Why are people still debating this?  Is there any regular poker player who doubts it?  Why does it require an academic paper (instead of, say, a two-paragraph summary of the evidence)?  Why the resistance to understanding what should be obvious?

I think it's a combination of things.  Poker, involving gambling as it does, is seen to be a kind of "vice," a seedy lower-class pastime of the uneducated.  That prejudice conflicts with a view of the game as requiring talent and skill and serious cognitive abilities.  It's probably easier to assume poker is blind luck than to re-evaluate a long-held prejudice.

The unconscious syllogism goes something like this: Poker is "bad".  Games that require skill and intellect are "good".  Therefore, poker can't require skill and intellect!

Contrast poker to, say, bridge -- even non-duplicate bridge, where the cards are dealt randomly.  Would any judge reasonably consider that bridge is just a game of luck, that it all just depends on what cards you get?  Of course not.  Bridge is played by upper-class, educated people.  Since it doesn't carry the same aura of vice, there's no dissonance in assuming it requires brainpower.

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Coincidentally, I found an article published only a couple of days ago that details a very similar debate about pinball and luck.  

In 1976, New York City had a legal prohibition on pinball, which the industry was trying to overturn.  City Council refused to believe pinball was a game of skill, so the industry got Roger Sharpe, one of the best players in the country, to demonstrate his abilities.  (Sharpe later went on to become a pinball designer and consultant.)

Sharpe played expertly, but one stubborn council member argued that the machine might have been tampered with.  So, Sharpe played skilfully on a second machine.  The councilman was still skeptical.  

So, according to the article, Sharpe decided he needed to resort to desperate measures.  The machine he was playing, "Bank Shot," had five lanes at the top of the playfield.  Sharpe told the skeptic that he would pull the plunger in such a way that the ball would wind up in the center lane.  In effect, he "called his shot."  He succeeded.  The head of the council declared that he had seen enough, and pinball became legal.

The thing about this is ... there was a lot more luck in Sharpe's "called shot" than in his high-scoring games.  For one thing, there's probably, by my guess, a 10 to 15 percent chance that any given shot would wind up in that lane, just by luck.  (A first guess would be 20 percent, but, from my experience, those machines were usually designed so that the center lane is the hardest.)

Second, even the best player is going to miss that shot occasionally. 

A more reliable test of skill would be to actually compete.  If Sharpe had challenged 10 councilman to a best-of-seven skins match, he'd have had almost a 100 percent chance of going 10-0.

For an analogy ... imagine Babe Ruth having to prove that hitting a baseball requires skill.  So, he goes out, plays a major-league season, and hits .356 with more home runs than many other teams.  But people still don't believe it.  So the Babe says, "OK, stand there in center field and I'll hit a fly ball right to you."  And they do, and he does, and now people are convinced.

That's about what it's like.

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The thing is, there *is* a significant amount of luck in poker and pinball.  But, of course, that doesn't mean much -- there's also luck in golf, and chess.  

The difference, perhaps, is that in golf and chess, it's mostly "invisible" luck -- your brain and your body just happen to be a bit off, beyond your control, or, a rare situation arises, randomly, that you don't know how to deal with.  However, in poker, there's an obvious source of "external" luck -- the deal of the cards.  Similarly, in pinball, where there are bumpers and slingshots that propel the ball unpredictably.

In both games, there are times when you lose and it looks like it couldn't have been because of lack of skill.  Your opponent lucks into the nut flush, or you hit a good shot, but a bumper rockets the ball straight down between the flippers.

But in the longer run, the luck evens out.  Every player gets good hands and bad hands; the difference is that the skilled player will know how to maximize the value of the pots he wins on the good hands, how to know fold early on the bad hands, and, most importantly, to know when his "good" hand is actually not good enough.  

In pinball, the good player will compensate for the unplayable "house balls" by taking better advantage of the others -- and, by learning which particular shots lead to higher-probability bad outcomes. 

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Most importantly, for this debate: it doesn't make sense at all to ask whether a game is "predominantly" luck or "predominantly" skill.  It depends not just on the game itself, but on the details of the particular competition.

For instance, there's more luck in a single hand of poker than there is in an eight-hour elimination tournament.  There's more luck when players are similar in ability than when they're not.  In the PAPA pinball championships, there's more luck in the final rounds ("playoffs") than there is in qualifying ("regular season"), because of how the rules go.

Some games are all luck ("buy one lottery ticket at random").  Some games are all skill ("be taller than the other guy").  Most games are both -- and the proportion of how much is luck, and how much is skill, depends as much on the details as the rules of the actual game.

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However, there is one universal.  Luck tends to even out.  So, the more you play, the less randomness matters, and the more skill matters.  In the long run, any game that has *any* skill component has a *large* skill component.

So, if politicians are truly worried about luck dominating online poker, they shouldn't discourage it.  Instead, they should mandate that everyone play more.









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9 Comments:

At Sunday, August 18, 2013 3:40:00 PM, Blogger Brian Burke said...

I'm a little conflicted about skill and poker. I think once a player has learned the basics, he's par with even the best players in terms of skill. Once all players are equal in terms of skill, luck dominates the outcome. Even if players differed significantly in terms of skill, it might take thousands of hands to determine who is the better player.

I think of poker like a complex version of rock, paper, scissors. Strictly speaking, RPS a game of skill. The skill is this: don't be predictable. Once everyone realizes the basic skill, now it's effectively a game of pure luck.

Poker works the same way...everyone knows the pot odds, and everyone knows to bluff a certain proportion of hands. So now luck dominates.

 
At Sunday, August 18, 2013 4:05:00 PM, Blogger Cassini said...

Your logic fails with thinking that learning the basics of poker puts you on a par with the best players. Learning the basics and mastering a game like chess or poker are not even close.

 
At Sunday, August 18, 2013 4:40:00 PM, Blogger Phil Birnbaum said...

Brian,

You don't think ability to read the other players is a significant factor? You think the situations are homogeneous enough that there's an overall "pot odds" heuristic that all players are using?

You could be right.

We could actually check that ... if the skill level plateaus at some point, we should see less variance in results now than in the past. For instance, if there used to be (say) 100 top players who knew the perfect strategy, and now there are 1000, then the top players should have an average tournament finish of 500 now, instead of 50 in the past.

Well, you have to account for luck ... so, say, 800 now vs. 80 in the past, or something.

 
At Sunday, August 18, 2013 5:41:00 PM, Anonymous Dave Rich said...

I suspect that in poker, as in baseball, basketball, football, & track, the mean level of "skill increases over time and the standard deviation of "skill" gets smaller over time.

That does not mean that there is not a large skill component.

I also suspect that there is more standard deviation of "skill" in less popular poker games (such as Omaha or Razz) than there is in Hold'em.

 
At Monday, August 19, 2013 9:42:00 AM, Anonymous Alex said...

You could argue about what the 'basics' are, but I would think there are a number of different levels you might have for learning poker. You can know the rules, you can know how to calculate pot odds, you can know how to read hands, you can learn how to read tells, you can learn strategy and how to hide your own play, etc. Perhaps any set of people who have learned to the same 'level' are pretty equal, but across lots of players you would see differences in who has learned what. And I would argue that there are certainly differences in how well players have learned a certain ability, like reading hands.

I will agree with Brian that it takes a good number of hands to determine who is a better player. But that doesn't mean that poker is a skill-less game any more than it means playing in the NFL (which we all recognize as requiring more evidence than we often get) is a skill-less game.

 
At Monday, August 19, 2013 2:23:00 PM, Anonymous Anonymous said...

http://pricetheory.uchicago.edu/levitt/Papers/WSOP2011.pdf

 
At Monday, August 19, 2013 2:46:00 PM, Blogger Phil Birnbaum said...

Thanks for the link! I should have Googled it ..

 
At Wednesday, August 28, 2013 8:45:00 PM, Blogger doc said...

I think I remember Phil arguing at one point--maybe about free throw shooting--that as skill increased and equalized between competitors, the role of luck became larger, not smaller. That it, skill--refined ability--is the primary determinant of performance. But, between functionally equal performers in terms of skill, luck will differentiate them *in the short-run.* (Or am I mis-remembering what you wrote about that issue, Phil?)

 
At Saturday, September 07, 2013 7:59:00 AM, Anonymous Anonymous said...

There's a SIGNIFICANT amount of luck in Hold'em Poker. David Sklansky pointed out that if the antes are at least 2% of the stacks, then in a heads up game, someone pushing all in every hand will break his opponent at least 40% of the time.

The best poker computers win about 0.08 big blinds per hundred bets at flat limit poker.

In a tournament, with about 10 players at each table, a player is involved in about 1/5 as many hands as in a heads up game, so in a single tournament, with a big chance factor, there will be a significant luck factor. Figure a good player will win about 55% of the time, giving him or her a 10% return (pretty highe), then the probability of winning a 1024 player tournament (1 in 2^11), is about 1 in 717.8 rather than 1 in 1024, yet that GOOD player is actually averaging a 10% return on each of his bets.

 

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