Have you ever heard someone say that they play poker because it’s “like life?” Some people play poker because it’s fun, because it’s intellectually challenging, because they enjoy the social aspects of the game and because it keeps you on your toes with wins and losses that can occur in a second.
But there are people who play poker frequently. They play online on social media and at the Sloto online casino, at neighborhood pick-up games and at tournaments. They play because poker is a game that forces you to play the hand that you’re dealt – just like, they say, real life.
Poker has been a popular game for hundreds of years, ever since it was introduced into the early European casinos of the 17th and 18th centuries. But in the last 100 years, poker has evolved into a game of strategy and technique. Seasoned players enjoy the way that skill and luck combine to reduce the element of chance and give skilled, knowledgeable players a chance to compete on a higher level.
There’s another element that attracts poker players as well and that’s how it reflects the ideas and values of our culture, including the capitalist culture in which we live.
John McDonald was a staff writer for Fortune magazine in 1950. He specialized in writing about the economy and business. He noticed at post WWII, poker was replacing bridge and canasta as the favored card game in America. He started to study how poker mimicks American capitalism. He wrote a few articles on the subject and then followed it with a book, Strategy in Poker, Business & War.
In his book McDonald discusses how poker has become central to the American culture. He points to how poker differs from other gambling games in its reliance on skill plus luck. He writes that bluffing is vital to the game because "the spirit of poker” functions to "create uncertainty between the players," which makes success dependent on the need for "shrewdness, cunning, deception, conscious strategies, suspicious appraisals of worth and character, and bold aggressions."
Poker is, says McDonald, "a travesty on life” that ensures that "all of the repressed values of a competitive society are let loose and placed first in the order of proprieties."
McDonald continues with an overview of how poker can be used to study game theory. Game theory is based findings of Oskar Morgenstern and John von Neumann who wrote about the subject in a 1944 book Theory of Games and Economic Behavior.
Von Neumann and Morgenstern theorized that poker wasn’t only a recreational activity that could satisfy the intellectually-inclined but was applicable to life as well.
McDonald provided additional information in his Poker, Business & War book where he explained how poker and other strategic areas of life like politics, business, war and conflicts, are related.
According to McDonald, poker is "is a kind of laboratory of man's experience... the laboratory of capitalism, and of socialism too for that matter."
Game theory is a science of strategy or the study of optimal decision-making of competing, independent actors in a strategic setting. It relates to the theoretical framework that is used to conceive social situations among competing players.
Game theory is used to predict real-world scenarios including issues like product releases and pricing competition.
According to McDonald, Neumann and Morgenstern’s distinction between chance-based games and games that include elements of skill introduce the study of "strategical games." These involve games of “random choice" so that the player "avoids knowing his own pattern" so that he can’t be exploited by an opponent.
Poker and bridge, says McDonald, are the best models because they contain "the full complement of game elements: choice, interdependence, imperfect information, and chance." But it’s poker that shines as the “ideal model of the basic strategical problem" due to bluffing where players try to trick their opponents by convincing the opposing players to call with weaker hands or fold with better hands.
McDonald calls up the “minimax” concept which was first articulated by von Neumann in 1928. That work, which laid the groundwork for von Neumann’s later work with Morgenstern, refers to a system of logic that has players minimizing the maximum expected losses and maximizing the minimum expected gains.
The strategy, explains McDonald, allows players to make decisions so that they place less emphasis on the less random, "known probable average outcome[s]."
These strategies relate to the real world most strikingly in business and war games and politics.
The two-man poker game parallels the situation of a buyer-seller relationship, notably in poker-concepts such as bet-sizing and identifying the exact right amount to elicit the desired response of an opponent (a fold if bluffing or a call if betting).
The analogy is limited because in the game, some players exert more influence than others which distorts the rules. Also, in buyer-seller relationships, coalitions can be formed which isn’t allowed in poker.
But, says McDonald, when examining poker, game theory can shed light on business concepts of “monopolistic competition” and oligopoly which baffle may in the field of economic thought.
War Games and Politics
Does poker shed light on political and military “games”? McDonald thinks that it does. He examines the rise to power of Adolph Hitler (1930s, German) and Joseph Stalin (1930s, Russia) as resulting from "coalition games."
During World War II there was an initial coalition between those two which ultimately broke off as Hitler invaded Russia and Stalin joined the Allies whose coalition was strengthened when Franklin Delano Roosevelt and Winston Churchill, recognized the importance of the coalition made concessions to maintain the Allies' stability.
Game theory is even better expressed in military conflicts where, says McDonald, “the theory of games is more highly developed and exact." He posits that military issues are two-person games which allows the findings of the game theorists to be more readily applied.
But, says McDonald larger wars between nations are different than isolated engagements and particular battles between opposing forces. "War is a kind of experiment," he explains, "a test that generally would not be made if the opposing forces could measure accurately one another's strength. Unless there is a great disparity in the sides, the possibility of such measuring [provided by game theory] seems like daydreaming."
Game theory is a fascinating subject though whether it does indeed have practical implications is questionable. McDonald’s presentation of game theory introduces us to the discipline and it’s necessary to look elsewhere for a more in-depth understanding if we are using poker to examine how poker imitates real life.