You are heads up at the fina WSOP ME table and pondering a deal...

[HesseJam]

... and assess your situation:

You have only 10% of the chips which are about 100 big blinds of the current blind strucure. At stake are:
1st Place: 18 Mio $ and the bracelet
2nd Place: 2 Mio $
(Note: this is not the real payout strucure, which would be more like 15 Mio / 7 Mio).

During the break you run into your opponent in the bath room.

What kind of deal would you propose if your opponent was
a) a Chris Moneymaker type but who hasn't yet won anything.
b) David Sklansky (somewhat known /images/graemlins/smirk.gif poker pro and book publisher).
c) a solid poker pro known only to insiders but no publishing deal.
d) Bill Gates, who you noticed playing somewhat better than solid ABC poker.

Who would potentially give you the best deal. What would be the most important factor in your opponent towards getting a good deal. What would be your arguments?

[Klepton]

http://images5.theimagehosting.com/FixedThisThreadSucks.gif

[trillig]

A deal?

At that point, I would never expect a deal .

I wouldn't offer one either, if I had 90%.

I got a deal in a SnG for WSOP lammers last year, I was stunned, he had 93% I had 7%, I took it.

-Bri

[HesseJam]

I do not understand how there could not be a deal.

If I had 90% of the chips in this particular case I would seriously consider a deal. I would hate to loose the whole 16 Mio even if the odds that this happened were small.

So, I understand that you wouldn't even offer, let's say, $500.000 to the small stack to settle the money and to continue to play just for the bracelet?

[fl0w]

I doubt any small stack would take that

[HesseJam]

And he shouldn't.

If I was the small stack, I think I would gun for a 6 Mio to 14 Mio distribution if the opponent was Chris Moneymaker or the poker pro. And I would be rather confident that I could convince them to make the deal.

If it was Bill Gates I would gun for a little more but my arguments would be way different and I wouldn't be confident that I could struck any deal.

I am pretty confident that I could not reach any deal with Sklansky.

The playing skills of the different opponents will play almost no role here.

[M.B.E.]

[ QUOTE ]
At that point, I would never expect a deal .
...
I got a deal in a SnG for WSOP lammers last year, I was stunned, he had 93% I had 7%, I took it.

[/ QUOTE ]
I assume the deal was that your opponent paid you 7% of the amount he would receive as winner? If so, what is surprising about it?

[M.B.E.]

[ QUOTE ]
(Note: this is not the real payout strucure, which would be more like 15 Mio / 7 Mio).

[/ QUOTE ]
I thought the payouts for 1st and 2nd were going to be something like $7.5m/$4m (http://forumserver.twoplustwo.com/showflat.php?Number=2503030#Post2503030).

[ QUOTE ]
What kind of deal would you propose if your opponent was
a) a Chris Moneymaker type but who hasn't yet won anything.
b) David Sklansky (somewhat known /images/graemlins/smirk.gif poker pro and book publisher).
c) a solid poker pro known only to insiders but no publishing deal.
d) Bill Gates, who you noticed playing somewhat better than solid ABC poker.

Who would potentially give you the best deal.

[/ QUOTE ]
It's really a question of negotiating tactics. In general, if I'm making the first proposal of a deal, I would propose something where I get more than I'd ultimately be willing to settle for, but not so much more that it seems like an offer in bad faith. It's trivial to work out each player's basic equity, perhaps making a small adjustment for skill level, but the real question is, if there is a deal will it be in line with each player's equity, or will one player get substantially more than that? This depends mostly on the relative negotiating skills (not poker-playing skills) of you and your opponent. The correct negotiating strategy most likely would be to pretend that you don't care very much about variance, you are happy to gamble for the money, so that your opponent is induced to offer you more than your equity because he or she believes that's the only type of deal you'd agree to. Your opponent will be trying to do the same thing; if it's Bill Gates then it will be easy to persuade you he doesn't care much about the variance so if you wanted a deal you'd probably have to accept less than your current equity. But against any of the other three you might well get more than your current equity.

[M.B.E.]

[ QUOTE ]
I am pretty confident that I could not reach any deal with Sklansky.

[/ QUOTE ]
Why not? It is no secret (http://forumserver.twoplustwo.com/showthreaded.php?Number=2299181) that he is risk-averse (e.g. "For me to flip a coin for 100K someone would have to lay me 130-100").

If you are heads up with David Sklansky and you persuade him that you are less risk-averse than he is, then you will be able to cut a deal that gives you more than your current tournament equity.

[HesseJam]

[ QUOTE ]
if it's Bill Gates then it will be easy to persuade you he doesn't care much about the variance so if you wanted a deal you'd probably have to accept less than your current equity. But against any of the other three you might well get more than your current equity.

[/ QUOTE ]

Variance is the key factor here. For most of us this would be a once in a lifetime thing. For most of us, the difference between 2 Mio and 18 Mio is the difference between being financially secured and filthy rich.

Bill Gates would be different. The money would be no difference to him. So I do not think I would be getting less than my current equity, I wouldn't get anything for that reason. If I am lucky, Bill would like to appear generous and then I would maybe get a lot more than my equity.

Sklansky might be risk averse but he is somewhat cocky and would put some value to win the bracelet untainted, e.g. sans deal.

[M.B.E.]

[ QUOTE ]
If I am lucky, Bill would like to appear generous and then I would maybe get a lot more than my equity.

[/ QUOTE ]
Bill Gates is generous in that he gives a huge amount of money each year for charitable purposes. But the situation you're talking about is a business arrangement, so you won't see him give away EV. I'm pretty sure that if you were heads up in a tournament against Bill Gates and were able to strike a deal, you would be receiving less than your tournament equity. (Unless he had somewhere important to go -- then it might be worth it to him to pay a bit extra to get the thing over with quickly. But otherwise, because that amount of money is more significant to you than to him, he would be in the better bargaining position and should be able to do a deal that favours him EV-wise.)

[ QUOTE ]
Sklansky might be risk averse but he is somewhat cocky and would put some value to win the bracelet untainted, e.g. sans deal.

[/ QUOTE ]
If the deal provides that you continue playing for the bracelet then there would be nothing "tainted" about it.

[wiseheart]

Couldnt you use game theory to find
a Pareto Optimal level or such? It
should not really matter the opponent
so much as their bargaining position,
but I was reading about game theory,
and it seems in a lot of tests the person
with a chance of winning big will almost
always not strike a deal and thus not
achieve his pareto optimal. Any math majors?

[Ulysses]

I dominate them all, so here would be my offer:

"We end it now and you walk away with $3m straight cash, homey. I take $17m and the title."

If I had a little more, I wouldn't deal. But down to 100bb, you can't completely discount the impact of luck, so it's not 100% certain I would win, just very likely.

[BonJoviJones]

[ QUOTE ]
Sklansky might be risk averse but he is somewhat cocky and would put some value to win the bracelet untainted, e.g. sans deal.

[/ QUOTE ]

Er, being that Sklansky is a poker book author, I imagine there is more than "some value" to him winning the bracelet, and it has nothing to do with being cocky.

[Moovyz]

This isn't a very good example of what you are trying to guage. You'd be better off posing the question by stating that both players have equal chips, or close to it and then see what kind of deals you'd offer against the different type of opponent. Perhaps a bigger ratio of blinds would make a better question as well.

The reason is that if your opponent has 90% of the chips, he'd be an idiot to offer any deal that gives you more than you'd get for second. He can raise all-in "blind" 3 times in a row, lose all 3 and still have 200 BB to play with (20% of the chips in play). The odds on him winning the the Lion's share of the money are better than the 66% indicated.

I remember reading an article that basically stated that if you hold a 9 to 1 or better chip position, you can safely go all-in on every hand until you lose the chip lead, then play normal. The article stated that this was a mathematically correct play (and even better play if you pick the best hands to play) because the money for 1st is often close to twice the amount for second. There was alot of math involved in the article, and I honestly can't quote the exact figures here, but it basically showed that when you dominate this much in chips, you CAN NOT lose money in the long run by betting every hand all-in because even if your hand is dominated, you usually still have a 20% or better chance of winning that hand and the odds of losing 3 in a row are offset by the payout and the fact that you can resume normal play if, and when you lose the chip lead. So that being true, who would offer a deal?

[HesseJam]

You are treating the problem with the wrong tool: the EV concept. You should apply EV as a decision tool only in repetitive situations.

This is a once in a lifetime situation for most players. It will never come up again. If you play it out the result will be either 2 Mio or 18 Mio which is a big difference for both stacks.

You need to analize the risk/utility function of each bargaining side (your own and your opponents).

If I am the small stack I get 2 Mio for sure. This will provide some financial security for me and my family. I am happy. But I have a small shot at getting filthy rich from a save point. I gonna take that shot! I have nothing to lose and a lot to gain.

The big stack is very close to becoming filthy rich. It is not going to take a lot to get there. However, there is that risk of falling back to just being financially secured. He does not have a lot to gain at this moment but a lot to loose.

El Diablo above offered 1 Mio. He simply traded the difference between a) his personal utility values of 2 Mio$ and 18 Mio $ respectively multiplied by the rate of risk he will forego this difference for b) his personal difference between the utility values of 17 and 18 Mio$. I think he is seriously lowballing here and should be happy to give up more. Whats the difference of winning 18 or 16 Mio$? Well it is 2 Mio $, right. But 2 Mio$ mean a lot less to somebody who has 16 Mio $ than to somebody who has 2 Mio$ which would be the outcome if he lost.

But wait, maybe he is just negotiating well! He tries to assess my risk utility function. What may it be worth to me to get additional 1 Mio$. It may mean a lot! My financial security would be up by 50%. OTH since I am already more or less financially secured it may not be enough that I give up the shot at the additional 16 Mio$ and become filthy rich. I personally could live with the decision to turn down the additional 1Mio $, take the shot and lose. I'd be also happy with my 2 Mio.

Could El Diablo make his peace with his 2 Mio in the small likelihood that he lost the battle under the assumption that the battle could have been over if he had offered 2Mio and settled for 16 Mio?

[mackthefork]

I want 4.25 million against Gates and Moneymaker, Sklansky and the other pro i would take the 3.8 million against. Or no deal.

Regards Mack

[TheKnife]

[ QUOTE ]
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[/ QUOTE ] yes!

[luvrhino]

Dear Mr. Sklansky,

As you and i are both somewhat risk averse, i propose that we pool our winnings from this year's Main Event together and split them 50-50. That way, we'll each increase the likelihood of cashing, which must be a good thing.

You have until the start of the tournament on July 7th to respond to this offer, otherwise i may have to reconsider.

I Remain, Very Respectfully, Your Obedient Servant,
luvrhino

[threeonefour]

In a situation like this:

Maximax rules Maximin is for suckers. No deal