Thinking in Bets – How Poker Can Teach Us to Think Under Uncertainty

Poker is a card game with a wide variety of variants, all of which require skill to win. It involves placing chips (representing money, for which poker is almost always played) into a pot and betting on the strength of one’s hand. Players may raise or lower their stakes as the round progresses, but must always make an equal bet to stay in the pot.

The cards are shuffled and each player puts an ante in the pot, which is then dealt two cards face-down (hidden from the other players). This is known as the pre-flop phase of the game. Players then place bets on their hand according to the rules of the variant being played.

Once the players have a sufficient number of chips in the pot, they can choose to reveal their cards. The first to do so wins the pot. The players may also “check,” meaning they are not raising their bet, but can instead wait for other players to raise before they act.

Among the most interesting things about poker is its ability to teach us how to think under uncertainty, whether in finance or in life. As former professional poker player Annie Duke explains in her book, Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts, to decide under uncertainty, we must consider all of the different scenarios that could occur and estimate their probabilities. We must also know how to bet strategically, weighing the probability of each hand and the amount of money that could be won or lost in a single betting interval.