Thinking in bets is the process of making decisions for situations shrouded in uncertainty. Former poker champion Annie Duke said it best: “the approach of thinking in bets moved me toward objectivity, accuracy, and open-mindedness.”
In life, when faced with multiple job offers, you bet on the trajectory of each company and your own potential career growth within each role. Even for a task as routine as parking, you bet on whether it’s worth your while to drive around the block looking for a spot rather than paying to park immediately. When you’re playing poker, you bet you have the best hand when you call an all-in on the final betting round.
Poker is a game centered around betting and interpreting those bets. In poker betting strategies, each bet has a specific purpose: either to get value from an opponent, bluff an opponent, protect a vulnerable hand, or to remain unpredictable. You base these bets on your “equity” for a given hand (the share of the pot you are currently “entitled” to according to your current odds of winning the hand).
These four betting strategies are called:
Using poker’s logical framework for betting, you can become a more astute decision maker at the card table, in your career, or in your personal life.
Betting for Value
The most common reason to make a bet in poker is to get your opponent to call your bet with a worse hand. This is called a “value bet,” and you win their chips.
There are a host of situations to derive value in personal finance and in your career. Investing any money you don’t need for daily use is a slam-dunk way to grow wealth by an average of 7% per year.
Even money that you do need to keep liquid, like an emergency fund, rent money, or a bank account linked to your credit cards, can be held in a high-interest savings account to earn as much as 3% interest per year.
You can go for value by ditching the warranties on affordable appliances or flights and by getting the most out of your home by renting it out as an Airbnb or house hacking. But the biggest value bet you can make is by investing in yourself.
This means negotiating at any opportunity and pursuing education or training to grow your productivity in the workforce. Not only is your salary negotiable, your title and benefits packages are too. Even seemingly fixed expenses, such as medical bills, bank fees, and student loans, are all negotiable if you play your cards right. In their book, “Women Don’t Ask: Negotiation and the Gender Divide,” authors Linda Babcock and Lara Laschever write that men initiate negotiations four times as often as women. But those numbers could go up if women tap into the power of poker and apply the negotiation and betting skills they learn playing poker to everyday life.
Betting as a Bluff
Another reason to place a bet in poker is to make your opponents fold a hand better than yours. This is called a “bluff,” and you win the chips that are already in the middle.
Bluffs made outside the poker table are also made in business. In deal-making and pitches, it’s common practice in many industries to overstate your position to gain more bargaining power or understate your margins to land a better price.
The morality of these risky maneuvers has been debated in business literature since the release of Albert Z. Carr’s article, “Is Business Bluffing Ethical?” But so long as a bluff is legal, compliant with company policy, and is in a client’s best interest, it can be an invaluable tool at your disposal.
Bluffs in business, just like bluffing in poker, are at their most effective when they are credible and when other players stand to lose something by “calling the bluff.” It’s important to remember that poker and business are built around thriving in the long term, so bluff selectively and your losses will be recoverable even if something goes awry.
Betting for Protection
There are situations in poker where you might want to bet to protect a vulnerable hand, to preserve your equity in the pot. By forcing your opponents to call a bet to draw out on your hand, you either build a bigger pot when you are favored or cause your opponent to fold and win the pot immediately. You can protect yourself from risks in life by purchasing insurance, doing diligence before making big moves, keeping yourself healthy, and regularly trying new things.
Insurance is a financial instrument designed to protect you against catastrophes like a house fire or expensive surgery. By paying small premiums during good times you make a bet to access reimbursement in the event of a large unexpected cost.
Spending a few hours to confer with friends or online resources before committing to a move in career, geography, or lifestyle is almost always time well spent. You can also reduce the likelihood of the most common health issues by eating right, exercising and scheduling regular medical checkups. These steps are preventative measures to reduce the likelihood of a nonfinancial misfortune.
Another way to think of this is that you’re fortunate to have this life now, and even if you have to pay a bit for insurance and spend a few hours a week keeping informed and healthy, you would still have a good life. These behaviors are a bet of leisure and money to win peace of mind and the sustainability of your good life.
Finally, you can make a protection bet against regrets by going after your dreams. The downside of taking your talents to an open mic night or setting up a meeting with an engineer for your startup idea are small compared to the potential upside of unlocking a new, fulfilling direction in life.
Just like with insurance, you’re betting something small to have a big quality of life improvement in the instance of an unlikely event.
Betting for Balance
A concept employed by high-level poker players is to take certain actions with different types of hands to remain unpredictable. This is referred to as “playing balanced.”
For example, if you signal strength early in the hand and the community cards synergize with strong starting hands, you might want to bet no matter what you have because checking would give away costly information.
In life and in your career, building a strong reputation gives you balance. If you treat people well and fairly, you’ll get the benefit of the doubt when you misspeak or need to cancel at the last minute. It’s the ultimate protection bet on yourself. Balance is particularly important for repeated interactions, like product releases or meeting with external partners.
Practicing consistency in your life helps tackle cognitive biases. Why live lavishly when you get your Christmas bonus only to pinch pennies in tax season? Why chase sunk costs at the poker table when the math is no different whether you’re up or down? Why harbor resentment towards someone who doesn’t know they’re in the wrong rather than endure a couple minutes of awkward confrontation?
Our emotional selves don’t ask these questions, but our balanced selves will. Approaching life with the power of poker shows areas where thoughtful action can make us healthier and happier than impulse ever could.
Learn more about how bets and poker can build life skills and accelerate your career with Poker Power’s community lessons. We’re teaching 1,000,000 women how to play poker from the ground up. Take a seat at the table and discover the power of poker.