Happy Poker with Loss Aversion

Weekly I/O#49

Losses hurt much more than the happiness gained from winning. Therefore, we must focus on the process to overcome this asymmetry (loss aversion) in zero-sum games.

Podcast: Annie Duke on Poker, Probabilities, and How We Make Decisions (Ep. 99) | Conversations with Tyler

Annie Duke is a professional poker player with a Ph.D. in psychology. In this episode, [Tyler Cowen](Tyler Cowen) asked Annie: "If you enjoy risk for its own sake, you'll go broke. But if you don't enjoy risk for its own sake, what are you doing playing these zero-sum games?"

Losses hurt much more than the happiness gained from winning. This asymmetry between how sad people are when they lose versus how happy they are when they win is known as loss aversion. Because poker is a zero-sum game (one's gain is equivalent to the other's loss), it's generally hard to be a happy poker player.

Therefore, it will be hard to be a happy poker player unless we focus on something other than just the result. For Annie, the way to happiness is to focus on the process. From a cognitive science background studying learning, Annie took poker as a different way to study learning. In this way, the poker game becomes a powerful laboratory for thinking about human decision-making.

We can apply this perspective to many places. We cannot always win. If we hook our happiness only with the result, we are doomed to have a hard time when we are out of luck. Therefore, we have to be able to find other sources of happiness.

Want to learn 5 bite-sized cool things like this every week to understand the world better? Sign up below for my free weekly newsletter and learn together!

Weeklyio Banner