Monday, April 29, 2013

Delusion and Arrogance

The world really does run on delusion.  We have all heard that something like 90% of drivers think that they are above average, and we can all see that obviously this is completely ridiculous.  At a minimum 40% of people are getting the answer to a true false question incorrect here (and that's if 100% of the people who actually say they are below average actually do suck at driving).  There should be a little bit more signal, or so you'd think, but that wouldn't take into account the fact that most of the human population is completely delusional when it comes to rating their own competency.  I read somewhere that only the clinically depressed do well when it comes to accurately assessing one's strengths and weaknesses.  That's pretty absurd, if you think about it, but it kind of makes sense from an evolutionary point of view if you make the simple assumption that confidence helps us survive.  And while I'm not necessarily sure that was true millions or even thousands of years ago (you can make cases both ways, obviously.  being confident that you can catch the prey or win the fight helps, if you're right...), it is definitely true in modern society.  Confidence in men is most certainly sexually selected for by the finer sex, and therefore it stands to reason that as we go down through the generations we should end up with more confident people and fewer with low self esteem;  those guys just have a harder time getting laid, right?  Or at least that's what women's magazines would have you believe.

None of that is really the point that I'm trying to make, though, so if you disagree as usual I'd say you could well be right and read on anyway.  What I want to talk about here is how our society, and particularly the segment of it that I wade through day in and day out, is set up to take advantage of this chronic over-confidence.  For an easy example let's take the housing boom.  What fueled that?  Well OK a lot of shit fueled that but one of the primary problems was that confident, aggressive people were SURE housing had nowhere to go but up (despite the fact that since our population was not sky rocketing it made no sense that "space to live" was doubling in value) and therefore made not just an effort to become more exposed, but rather a herculean one.  And what happens when people make a herculean effort to buy something they probably shouldn't?  Businessmen bend over backward to sell it to them, that's what!  Bang...housing bubble!

What about poker?  It's sort of the same thing as the preposterous driving statistic from above (for the record I believe that my "A" driving game is probably in the 75th percentile across all humans, perhaps slightly lower if you account for the fact that good drives drive more miles...My "B" game, however, degrades rapidly).  I have never done a study on this, but I'd be willing to bet that something like 90% of poker players over-estimate their skill (and edge) in a given situation.  There are lots of reasons for this.  People who run poorly to start their careers tend to quit;  those who run hot tend to stick around and then assume they are running badly for the next 15 years.  People who think they are losing players don't have much fun and therefore quit.  People who think they are winning players enjoy their time at the club and come back again and again.  Pros don't realize that they are in tough games where people just aren't making idiotic mistakes.  People get drunk and don't realize how bad they play when they do (except Medium Bob....that dude plays SOLID when he's drunk.  And honestly 8 mile too....props guys).  I mean just run the numbers on how much money is going down the hole in your average 40/80 game at Commerce and it'll make you cry.  40 hands per hour, almost no chops, 5+1+ tip that's something like $250-$280/hour.  That's $30 EACH!  You have to win about 1 bet per hundred hands just to break even;  what percentage of the population is capable of that?  10?  20 seems absurd.  And yet there are routinely 4, 5, 6 games at that level, not to mention a 60 or two, and a half dozen other games.  And let's not even talk about 8/16 and below which I am close to convinced is completely unbeatable.  The point is that people think they can win, they really do, and the owners of the casino are very, very happy to just let them try their hardest and wonder why they never seem to catch that big hot streak.  Good lord I can't imagine how badly some fish can run, given that in theory I am one of the people who does win and I have taken 300 bet downers.  Imagine if my "true win rate" was actually -1 instead of +.5 for those 150 hours!  I'd have lost another 225 bets!

I was planning to pick some more things to talk about but honestly this post is probably long enough.  Make sure you assess your own skills (and your ranking among your peers) accurately.  Confidence is probably a good thing, but when it creeps towards arrogance or delusion it can really get expensive.

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