ANNIE L U C K B O X
A: B E T S
People have used that word “pivot” in relation to me quite a bit. I’m going to use the word “quit.” I quit things all the time. “Pivot” is a euphemism because we think that quitting is negative. Quitting is a very necessary part of poker. People talk about aggression as being a defining difference between great poker players and average ones. But the big defining difference is actually quitting behavior.
T H I N K I N G
I N
Do professional poker players quit more often than amateurs? Amateur poker players play over 50% of the two-card (hole) combinations they’re dealt, while great players play between 15% and 25%. So what that means is that the pros are quitting a lot more early and a lot more often. I’m very happy to say that I’ve quit many things in my life. Some people must be better than others at quitting. One of the principles of being a great quitter is to understand that you always want to be exploring, not just exploiting. This is “exploit” in the game theory way, or the “algorithms to live by” way. It means you’ve got a good thing going and so you do it. But it’s really important to have other lines of inquiry open during your life. So what looks like a lot of quitting behavior is actually elevating certain things that I was exploring and deprivileging things that I had been exploiting. I’m moving between threads that I always have open. Do you lose something when you quit? The good news is you can go back to things that you quit, which is nice. I started off as an academic, which is where I’ve now ended up again. And you were playing poker in the interim? I did five years of Ph.D. work at Penn. And during the last couple of years there I played a little bit of poker that was exploratory. I was playing it with my brother,
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DUKE ON TRADING, BET-SIZING, PROSPECT THEORY, OUTCOME BIAS AND QUITTING BY ED MCKINLEY
Howard Lederer, who was a world champion in his own right. It was kind of fun. He would take me out on vacations, and I would sometimes sit behind him or play a little bit myself. Then at the end of graduate school I got sick, which forced me to take time off. During that year, I started playing poker and just really, really loved it. So I left academics.
The public identifies you with poker. The amount of time that I was exclusively playing poker was actually only eight years. It’s not something people know because my public-facing self was as a poker player. How did you move on from poker to become an educator and consultant on cognitive behavior and risk-taking? In 2002, I was asked by a hedge fund to speak to their options traders about how poker might inform their thinking about risk. What I had been studying in graduate school was learning under conditions of uncertainty. So, I didn’t talk about risk management in terms of the Kelly criterion (see p. 22) or anything like that. I talked about the way that the path you’re on with losses and gains can distort your risk attitudes. This conversation was edited lightly for style and brevity.
PHOTOGRAPH: COURTESY OF ANNIE DUKE
Q:
You’ve pivoted from professional poker to teaching and giving talks on the behavioral psychology of decision-making. How did that shift occur?
L E A N S
Luckbox | August/September 2021
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7/21/21 10:47 AM
