Identifying and Attacking Risk Aversion

There has always been a bit of crossover between golf and poker. Whether it’s the legendary wagers placed on the course between poker giants Ivey, Brunson and the like or Dusty Schmidt’s million dollar golf and poker hybrid challenge, some similar threads undeniably run between the two games. That’s why a new study that focuses on risk aversion in professional golfers may be especially interesting to poker players.

The study in question, “Is Tiger Woods Loss Averse? Persistent Bias in the Face of Experience, Competition, and High Stakes”, is the work of University of Pennsylvania professors Devin G. Pope and Maurice E. Schweitzer. Pope and Schweitzer studied over 1.6 million putts and essentially found that golfers are more cautious on some putts because they (illogically) place more value on avoiding a bogey than achieving a birdie. And not just your average duffer – the study provides “evidence that even the best golfers – including Tiger Woods – show evidence of loss aversion” and that the tendency to irrationally defend against loss “costs the best golfers over $1.2 million in tournament winnings per year.”

That’s 1.2 million a year on average.

If someone as disciplined and confident as Tiger Woods is susceptible to this effect, then you can safely bet that it’s something everyone falls prey to and that it likely impacts the typical individual far more than they’re aware of.

A moderate level of loss aversion is an admirable, desirable quality in a poker player. It keeps bankrolls managed, allows stacks to survive and generally lets players live to fight another day, as it were. An excessive amount, however, is essentially a leak in a player’s game that can (and will) be exploited by players who more effectively asses the true cost of loss.

So where do you fall on the scale? Below we’ve outlined a few basic things you can do to get a better sense of how loss averse you are. As a bonus, most of the suggestions below will also serve as opportunities to identify other possible leaks in your game, so even if you end up concluding that you’ve got a steadier nerve than Tiger, you’ll likely find other areas where you can improve.

Compare your stats to your peers in similar games

Take some key stats from PokerTrack or Holdem Manager like % went to showdown, preflop aggression, fold to three bet, etc and compare them to your friends stats. If you don’t have a lot of poker-playing friends or your friends don’t play the same games as you, post the stats (along with details about the limits / games you play) on a poker forum. You’ll have to sift through some bs responses, but you’re likely to get other people to share stats with you. Obviously, there’s no ‘perfect’ stat line you’re shooting for, but if you start to notice that your numbers are consistently off from your peers (in the passive direction), you have some strong evidence that you’re focusing too much on avoiding loss.

Save the hand histories of the next dozen times your tournament life (or stack, in a cash game) is put at risk. Review them a week later.

If you are excessively loss averse, it’s most likely to manifest in the situations where you have the most at risk. Tracking those situations and then reviewing them when you have some distance from the event (and therefore can view it in a more removed and rational fashion) is a great way to get insight into your true level of loss aversion.

Play a friend in an online match. Review the match later from their perspective.

Hand histories offer a player a really awesome opportunity that not enough players utilize – the opportunity to review your play from an opponent’s perspective. Play someone you know in a heads up cash or SNG match (make sure the stakes are high enough that you’ll play close to your usual game). Have your friend save their HHs and send them to you. Review the HH in a hand history replayer after the match and see how your play looked from the other seat. Try to imagine how you would play against someone who played like that, and notice how your friend adjusted to your play. Both exercises should shed a lot of light on whether or not your concern about avoiding loss is translating into opportunities for your opponents.

Notice and record your reactions to getting big hands.

There are two kinds of poker players – those who look down at jacks in the BB and think ‘awesome’ and those who look down at jacks in the BB and think ‘ahh, crap’. Try an experiment – keep a record for a session of your gut reaction when you get big hands in critical situations. If you fall more often into the ‘ah crap’ camp, that’s a pretty clear sign that you are likely to be over-emphasizing limiting loss.

Drop your buy in level significantly for a session or two and see if your play changes.

It’s one thing to say that you’re not thinking about the money when you’re playing poker – it’s another thing to really mean it. A good way to test how good of a job you’ve done separating the chips on the table from the balance in your bank account is to drop down to a much smaller game. Do you find yourself calling far more often or mixing more bluffs into your game? Do some automatic plays no longer seem quite so automatic? If so, you might find that a few of your core assumptions about poker aren’t underpinned by solid strategy but rather by a low tolerance for loss.

Obviously, loss aversion is a reflex that everyone has to some degree. In many areas of life, it’s a positive trait. In poker, however, it’s a tendency that needs to be aggressively – and finely – calibrated to ensure that your innate fear of losing doesn’t prevent you from playing to win.

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