Prospect Theory in Texas Hold’em Poker
One of our teammembers attends at the University of Technology in Eindhoven and recently finished an interesting paper related to poker.
This paper reports a first attempt to find relationships between the game of poker and Prospect Theory, which is the dominating theory for decision making under risk. The goals were to find out whether typical decision making errors and biases exist among poker players and see if there were differences between the novice and expert poker player. Biases under consideration were misestimation of probabilities, the sunk cost effect and the framing effect.
103 people took part in an internet experiment and were divided into an Expert and a Novice group based on self report of skill. Results indicated that the expected deviations from rational behavior are present in the game of poker. Significant differences in all investigated biases and effects between skill groups were found, but of varying sizes and significance.
Read the whole paper by clicking on the link below and let the writers know what you think in this thread.
