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Risk Assessment in Poker
We, as humans do not like 50:50 gambles. If I offered you an even money bet on a coin flip for $1000, the vast majority of you would say no. If you had no choice in the matter and were forced to take the bet, you would likely react with discomfort and fear - praying that you did not lose would be a more common reaction than getting excited about the chance of winning. This risk avoidance process is a survival mechanism that has been responsible for the success of our species. In poker, however, it is a massive obstacle in the way of progress.

Risk assessment failure in poker is caused by the belief that to make an investment, the situation must be more favourable than 50:50.

As we shall see, this is almost never the case.

What is a 50:50 bet in Poker?

When it comes to facing a bet or raise, there is basically no such thing as a 50:50 decision. If the pot was completely empty and I bet $X, you would need 50% equity to make the call and break even. This is because you are investing one unit to win one unit, or in poker terms, your pot odds are 1:1. This situation almost never exists due to the gradual growth of the pot. There is almost always some dead money that we can add to the pay-out side of the pay-out: investment ratio. Even if the pot is a meagre $10 and you shove for a huge $50 overbet, I will be getting 60:50 pot odds or 1.2:1. This means that I need 45% equity to break even on my call.

Even when facing an enormous over-bet, we still need to be good less than half the time to call.

A true 50:50 can only be a bet into a completely empty pot, and so for all instructive purposes, we can assert that a 50:50 when facing a bet does not exist in poker.

The Subconscious Risk Assessment Process

The subconscious mind is programmed with a very definite test for figuring out whether or not to take a risk. In a healthy human adult, it sounds something like:

Take risk only if average outcome is significantly more good than bad.

This leads to us rejecting 50:50 investments instinctively and even refusing some opportunities that are slightly more good than bad. I would be willing to wager that most of you reading this would also turn down my coin flip proposal even if I paid you and extra $20 on top of the $1000 profit the times you won. You are inclined to reject this clearly profitable bet due to the 'significantly' part of the above risk assessment test that runs automatically in your subconscious mind. This test is there to protect you from enduring high levels of stress and volatility for minimal gain as doing so would harm your chances of survival. Unfortunately, to succeed in poker, enduring high levels of stress and volatility for minimal gain is something we must do over and over again. It is now becoming clear that the subconscious mind and its risk assessment programme misfire in the realm of poker and damage our chances of success. If you held JJ pre-flop and you knew I had shoved all-in (into an almost empty pot) with AKo, you should call, like it or not. You have 55% equity and you need 50% (or a tiny bit less when you remember that the blinds are in there acting as dead money).

Risk Assessment Failures in Poker

The most common bet-size that we are likely to encounter on the river is around 75% of the pot. When we face a bet of $7.50 into a pot of $10, we are getting 17.5:7.5 or 2.33:1. This means that our required equity is just 30%. Unfortunately, the conscious mind is so busy computing what Villain's range might be and how good our blockers are that it forgets to remember this very low target equity. The subconscious mind dutifully takes over this task and chants its misleading mantra: 'outcome must be significantly more good than bad.' In numerical terms, the subconscious is demanding that we have something like 55% equity to call – how absurd!

Actually, your 2.33:1 pot odds mean that the outcome can be significantly more bad than good and the call can still be profitable long-term. If Villain is bluffing just one third of the time, you can profitably call with your bluff-catcher. Many aspiring players fold here not because they misunderstand their opponent's range, but because they subconsciously set a ridiculously harsh target for themselves, concerning being good more than half the time. This is insane when we come to understand pot odds properly.

The Solution

The true required equity to call a bet is counter-intuitive to the subconscious mind. It will always tend to grossly over-estimate how often we need to win before we make an investment. The best way to teach yourself a better risk assessment test for poker is to designate this task to the conscious mind, at least until it becomes second nature. When you face a bet on the river, or an all-in before the river, the spot is simple enough that required equity and actual equity are all that matter. There are no implied odds or future fold equity to distort the picture. In these spots, start by stating your pot odds and resulting required equity. Only then should you begin analysing Villain's range and how often you think you might win by calling. Do this consciously at first until it becomes second nature. This may take weeks or months but will be well worth it in the long run. The brain needs to learn that the normal risk assessment test that serves us so well in life does not apply in poker. We must stop making bad folds due to an absurd risk assessment test!
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