Utility of Money vs Utility of Income

[DavidC]

Utility of Money:
-I'm saving for a car.
-Between now and buying the car, my money is of minimal use.
-If someone were to hand me a few tires tomorrow, or a steering wheel, that wouldn't really make me want to have a party... I'd just patiently store it away and wait til I had all the parts for my car.
-Therefore, my marginal utility of money is low.

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However, I have a problem when it comes to gambling... I like winning on a hourly basis, or at most a per-session or daily basis. I can stretch it out to a week or so before I start to get upset if I'm losing.

Like most poker players, I plow through it, but I don't like it.

Therefore, even though my utility of money is small, my "utility of daily or weekly income" is quite large.

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Two questions:

1) Is there any way I can squash this basic human instinct/need out of my life? [img]/images/graemlins/smile.gif[/img]
2) Would it be healthy to do that?
3) If it weren't, would it actually be wise (in a sense of maximizing utility, not maximizing EV) to give up EV in an effort to reduce variance whne I'm running well or I'm in danger of running bad?

(Yeah, that's three, oh well.)

--Dave.

[SheetWise]

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Is there any way I can squash this basic human instinct/need out of my life?

[/ QUOTE ]

Divorcing your game from the value of money in play is crucial -- you have that. Simply use a different metric than a "steady" win as a goal to satisfy yourself. Find a new way of measuring success so that time doesn't feel wasted as you're riding out an unfortunate fluctuation in income.

[soko]

I was in the same situation as you, pretty much identical situation. For me, I cashed out a large sum of my bankroll and start playing lower limits agian because my nerves just couldn't handle large swings in bankroll when at the same time I have so few "salary" dollars in the bank. The money in my bank is "on hold" in that I don't plan on spending it really, and when i have enough money in the bank where I feel comfortable I plan on staking myself with it agian later.

Your questions are very good questions, in my opinion these things are very important

1) People talk about this one a lot. Me personally, I look at every hand individually, and if I maximize my EV for that hand, I say to myself "awesome. I maximized my EV, I played well. I just have to sit here now and the money will eventually flow in." This makes me happy. Even when you fold J2o UTG, you have maximized your EV and therefor should be happy

In a way you are actually 'making money' because some other players faced with the same situation will not fold, and this means that if you are at their table, some of their loss in EV will be your gain in EV.

2) I am quite sure it would be. The only downside that comes to mind is that you become frivolous with money. But this is usually well worth it, becuase you will have more money to spend anyways. Unless you go like way overboard of course

3) It depends what you want. Why do you play poker? Some people think it's to maximize the EV of how much money they have, but I think this is wrong (but close)

If you were given a choice between getting a 50/50 shot at 3 trillion dollars, or getting a guarateed 1 trillion dollars, what would you take? I'd take the 1 trillion in a heartbeat. And I don't think there's anything wrong with taking the lesser EV choice in the case. That's because what's really important to me, is what makes me happy, not how much money I have (but that will indirectly affect my happiness)

The difference in 'happiness units' between my current state, and if I had 1 trillion dollars is far far bigger than if I had 1 trillion dollars and if I had 3 trillion dollars.

In conclusion, I recomend you do whatever makes you most happy on average, maximize your 'happyness EV'. You seem to already no this, and I'm just restating the reasoning here behing utility theory.

Of course this doesn't have to stop you trying to tinker with your own psycological mind and change what makes you happy (as in divorce your happiness from your short-term poker results)

But if that's unsuccessfull, maybe giving up EV to reduce variance (variance that your bankroll should theoretically be able to handle) is correct. After all, would you rather be constantly stressed your whole life but be a little richer, or be happy and relaxed all the time?

[DavidC]

Firstly, thanks to all the guys that responded.

HotPants, it appears that we're pretty much on the same page here. I've been exposed to these ideas as lot in the last 3 months. This is kind of a new paradigm in gambling for me. Believe it or not, the 1 tril cash or 1.5 tril in EV situation is one where a poker player is more likely to screw it up than an average person. I'm almost 100% sure that you realize this, but these sorts of analysis are used when evaluating two different gambles, and I think izverg posted something on this in a post in the probabilities forum called "advanced risk management".

... Anyways, I'm talking specifically about enjoying seeing daily progress, which to DO get to in your post...

I'd LOVE to know how people like potters (where they have a certain failure rate) or bonsai masters (where they don't really get to see daily progress) handle this sort of thing.

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I think it's definitely rational to give up some of your edge in exchange for reducing variance. Just as a little evidence of this, if you look at a post in the SSNLHE board recently "how do you make money at SS NLHE", you'll see that the crowd over there is unwilling to "push small edges for maximum profit". They figure that you'll go broke doing this. I have a feeling that their personal aversion to variance may be playing some roll in this analysis, though.

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After all, would you rather be constantly stressed your whole life but be a little richer, or be happy and relaxed all the time?

[/ QUOTE ]

Easy choice, IMHO! [img]/images/graemlins/smile.gif[/img]

The problem that I'm running into personally, though, is that if I try to use my utility of money from a perspective of stuff that I'm willing to buy and would get happiness from, then I do actually get a very risk-neutral utility curve. When I look at how much I enjoy money, just the numbers of having money, not actually using money, and more importantly, when those numbers occur, not just if they occur... well, I'm not even sure how to evaluate this and apply it to my gambling activities.

[DavidC]

hotpants, you may enjoy this post:

http://forumserver.twoplustwo.com/sh...age=0&vc=1

Another tactic is the 'realist' approach, believing that these factors are irrepressible, and that we will have a constant struggle with them.

In this regard, you can take steps to physically ameliorate the problem. When you are on a losing streak, you should quit playing. Better to be doing nothing than losing money at the table. You can change games and step down in blind/buyin levels and play an angry, cheap game to expunge your urges that lead to -EV. Study these psycological -EV tendencies. Bathe in them. Learn and grow comfortable with them so they are not intimidating in the future.

This is similar to blackjack strategy, where you would count cards and invest heavily when the deck is +player EV, and bet minimum or go to a different table when the deck is heavily favored to the house.

Invest in premium games on days when your disposition is light and sunny, and you are feeling fine. When you hit downturns, relax, take the pressure off and play some cheap fun poker for a while.