Saturday, April 04, 2009

Facing Risk

When everyone feels that risks are at their minimum, over-confidence can take over and elementary precautions start to get watered down. ~ Ian Macfarlane

It's an odd confluence of events that turned my mind to the concept of risk. First, I was the victim of a hit-and-run accident in which some loon drove through a stop sign and the rear of my car without ever so much as touching his/her brakes. I was not injured, save for a bit of soreness where the seatbelt kept me from flying across the car. Everything happened so quickly that I never even saw the other vehicle; the airbags deployed and blocked the view on the side where I was hit (those things are bloody fast). By the time I stopped spinning, the perp was headed for parts unknown.

The next evening, I was reading the Smithsonian magazine and stumbled across this article which discussed the proposition that increasing safety measures (e.g. seat belts in cars, helmets and padding in sports) has appeared to increase risky behavior.

The next day I was sitting in the doctor's office waiting to get a once-over to be sure I really was uninjured (I was). For some reason, my doctor has a TV in the waiting room with Fox News on it. Frankly, any news station would be depressing, but Fox News with its endless "the sky is falling" reporting is an extreme downer. One of the day's depressing breaking stories involved yet another loon walking into a building and killing a bunch of people.

Finally, there was this little bit of news from The New Scientist informing us that a group of scientists have determined that poker is, in fact, a game of skill, not of chance.

Putting all of these things together has led me to some conclusions.
  • If you try to protect people from themselves, they will still find ways to harm themselves. Give them seat belts and air bags, and they will drive like idiots because the seat belts and airbags will save them. Give them football pads and helmets, and they will be used as weapons by the atheletes because they think they're so well protected (as is the opponent that is currently being speared).

  • You cannot avoid all risk. A driver with no regard for others can be merrily yakking away on his/her cell phone, cut over two lanes, and send you over a cliff. A lunatic gunman could walk into the grocery store and blow you apart like a ripe watermelon. You could a bunker with a lifetime source of food, power, water, and video games, then trip over an ottoman and fracture your skull on a concrete wall.

  • There are different kinds of risk. There are the risks over which you have no control. Then there are risks which are voluntary, like climbing Mt. Everest or trying for the land speed record. There are risks which are discretionary, like how one invests. Then there are risks that are necessary to take because without the risk there is no reward. The scientist who puts forth a controversial theory risks a career; a firefighter going into burning building is risking a life. Yet without those sorts of risks being taken great leaps aren't made, and other lives aren't saved.
Which brings us to poker.

One can argue the merits of the study, which seems to base it's conclusion on the fact that of 103 million hands of online Texas Hold 'em poker, 76% ended without hands being revealed. That is, the losers folded rather than calling, so that no hands were shown. To the researchers, this meant that poker was a game of skill, because the better hand did not always win.

Entire books have been written on the subject of playing Texas Hold 'em, which is, in my opinion, to five or seven card stud what 9 Ball is to Billiards. All these games require skill; some of them, though, have a lot more variables to track.

I have been known to watch the World Series of Poker, and an interesting trend has developed. The young Internet-trained poker players are beginning to dominate the professional gamblers. Are we to believe that they are somehow more skillful? Or, is it because they play a different risk level?

Tournament poker is not the poker the professional grew up playing. In a tournament, you put up an entry fee which is all that is risked. For that you get a set amount of chips. When those are gone, you're done. You can't, in the parlance, put up a marker for the amount of the bet and continue. In other words, your risk is fixed
(I think some tournaments now allow a buy-back-in option, but I'm not sure how that works).

Also, when a certain amount of players have been eliminated from the tournament, everyone who is left is guaranteed a payoff, even if they lose all their chips. This is a virtual no-risk situation. Now imagine the Internet player now playing with his own money against a professional. There is no guaranteed payoff. The only way you walk away with more money than you started with is to win it. I would suggest to you that, in that event, a lot more hands are going to be played out with cards being shown.

That doesn't mean poker isn't a game of skill. The skill is in knowing when to bet, how much to bet, and when not to bet. The skill is in keeping yourself in the game until the cards turn your way or the other guy makes a mistake. I would submit that many an aggressive Internet player would fare much more poorly in a money game against a professional. It's a different game when it's your money. The player who is willing to go all in on a bluff and then hits a flush on the community cards might be inclined to play a little differently.

In other words, the Internet player who won big because he hit a straight when the other guy had a pair of aces in the hole might not hang around to find out if he's going to hit that straight.

There is a point to all this rambling. There are risks that I can't control. All I can hope is that, next time, I'm not going through that intersection when a crazy person runs the stop sign at high speed. There are risks I need to take if I want to feel good about myself, but I can measure those. And there are risks I will never take because the rewards don't outweigh the potential losses as measure them..

That's why I don't tailgate, relying on my ABS brakes to save me or cut someone off hoping they'll back off. It's also why I won't be climbing Mt. Everest any time soon.

And it's why you won't see me in Vegas unless I'm playing with someone else's money.

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