[MUD-Dev2] [DESIGN] Expected value and standard deviation

[Darryl Woodford]

On 7/30/07, cruise <cruise at casual-tempest.net> wrote:
> > I have been playing poker for many years and recently have been
> > teaching a couple of friends Texas Hold 'Em (due in large part to
> > ESPN/Travel Channel). I had to recently explain to them that it is
> > not as much about maximizing expected value, as it is balancing
> > expected value with standard deviation.

<snip>

> To be honest, an explanation of exactly what is meant by "balancing
> expected value with standard deviation" - statistics was always my least
> favourite part of maths :P

In a big money poker tournament, you might have a hand where you
(think) you are a slight favorite (52%/48% or so), say you have a high
pair and you think your opponent probably has  two over cards or
similar (AQo, JKo etc..).

If you were playing short stacked (let's say you have 6000 chips), and
your opponent (with 50000) put you all in, you're going to call,
because it's a good spot to get value for your hand, and you probably
won't last much longer anyway (blinded down, antes etc..)

Now let's assume you also have 50000 chips, and are the joint leader
of the tournament. Same hand. Opponent puts you all in. Should you
call? Well, in terms of expected value, yes.. in the "long run",
you'll be ahead by doing so.. but is there a long run? How many times
will you be in this position in a big money tournament? So the
decision on whether to call here or not includes a consideration of
variance (or standard deviations if you prefer). Calling would be a
high risk move, and you should probably fold, and look for a better
spot to put your money in (or outlast more players to cash more money
etc..)

(Percentages and numbers fudged for effect only)

~D

-- 
Darryl Woodford