Life Lessons from Poker Pt. 3: The Action-Inaction Fallacy

Life Lessons from Poker is a seven-part series of articles about how the things we learn in our efforts to master poker can turn out to be indispensable life tools away from the felt. If you’re coming to the series for the first time, Part 1 can be found here.

In the last instalment of Life Lessons from Poker, in which I discussed statistical thinking, I concluded by saying that it’s a low-stress way of looking at the world. When you push the improbable best- and worst-case scenarios out of your mind and realize that the expected average result is what really matters, it spares you a lot of worry and disappointment. If you were hoping that this whole series would be Zen-like and comforting, however, you may be in for a shock this week, because here I’ll be talking about throwing out a particular psychological security blanket that most of us hold very dear.

When it comes to decision-making, we have a tendency to label our various options as either active or passive: that is, courses of action which either produce or avoid change. Although this is a real distinction, it’s a problematic way to frame our choices, because we instinctively feel more responsible for the outcomes of active choices than we do for passive ones. When coupled with uncertainty, this can lead to choosing passivity as an emotional cop-out; perhaps the active choice is more likely to produce good results, but if it doesn’t, it feels like our fault, while it’s easier to displace responsibility when the bad result came about through our inaction.

A theoretical example and a practical one

The action-inaction fallacy is most famously embodied in the “trolley problem” thought experiment in philosophy. It was originally devised by Philippa Foot in 1967 to make a point about the ethics of abortion. Like any good thought experiment, though, it boils the question down to fundamentals, and has much broader-reaching application. It is now, for instance, a hot topic in artificial intelligence, specifically when it comes to self-driving cars, and how they should make decisions in situations where any course of action leads to some likely loss of life.

The situation Foot posed is this: You’re standing at a railway junction, by the switch. There’s a runaway trolley coming down the tracks. The switch is currently set to direct the trolley straight ahead, where there are five (or ten, or a hundred) people tied to the tracks. On the branch, there is also someone tied to the tracks, but just one. If you pull the switch to redirect the trolley down the branch, are you killing one person or saving four?

Most people respond to this question by saying that they’d pull the switch, that it’s regrettable that this leads to the death of someone who would have otherwise lived, but standing by and doing nothing while five people die is even more unconscionable. And yet, in practice, in real-life situations where the problem isn’t laid out in such stark terms, many people elect to walk away and leave the switch unpulled.

The fallacy doesn’t only crop up in life-or-death ethical dilemmas, of course. We all fall victim to it on a regular basis in very mundane, everyday situations.

Here is a more realistic and practical example: You have a friend who wants to sell her car. You don’t own a car currently, and don’t urgently need one, but would like to get one eventually. She’s been offered $3000 by a used car dealership for it. You’ve seen similar cars, certified to be in good condition, going for $5000, but neither of you has the expertise to tell if her car has some hidden problems which would make it worth significantly less. Nonetheless, she suggests you buy it for $4000, as that’s a win-win: You’ll be saving $1000 versus buying a similar car at a dealership, and she’ll get $1000 more for it.

Objectively speaking, the only question here is how likely it is that the car is a lemon. Say you figure there’s a 30% chance you’ll end up needing to do $2000 worth of repairs on it. Going back to our statistical way of thinking, that’s a $600 expected cost, less than the $1000 you’re saving, and you should go for it.

And yet, in practice, that uncertainty will be enough to cause many people to pass. Giving up that $400 statistically-expected savings doesn’t feel any different as if the offer had never been made in the first place; if you buy the car, however, and it does turn out to have problems which are expensive to fix, you’re likely to feel stupid for having bought it, and perhaps resentful of her for having persuaded you to buy it.

The action-inaction fallacy in poker

This way of thinking is a huge hurdle for newcomers to poker, because every decision facing a player involves a choice between one or at most two active options, and a passive one. If there’s no bet facing you, you can check passively, or bet actively. If there is a bet, you can call passively, raise actively, or fold, which is also an active choice in that it produces a major change, from being involved in the hand to not being involved in it.

Given that passivity represents a psychological escape hatch from responsibility and shame, is it any wonder that beginners, facing an uncertain situation, will almost always elect to check or to call, rather than any of the more active, committal options?

To a beginner, the decision to bet or the check feels more like a choice between deciding to bet, and not making a decision. Even more experienced players are often guilty of approaching the problem that way, particularly when giving advice. For instance, one standard rule of thumb given to novice players is that there are three possible reasons to bet: to get called by worse hands, to make better hands fold, and for “protection,” when the opponent’s range contains many weak holdings that could improve to beat ours if given a free card.

Implicit in that advice is the idea that checking is the default, what we do when we fail to find a compelling reason to bet, rather than one of two equally meaningful options. An interesting mental exercise is to try turning that around: Imagine that betting is the default when one has the chance, and we’re instead looking for reasons to check. What does that list look like?

It’s also possible to fall into the same trap when analyzing results after the fact. Say we’re checked to on the river, holding a moderately strong hand, with $200 in the pot and $100 left in our stack. Our choice is between going all-in or checking back and going to showdown. To an amateur player, the latter option has emotional appeal, as the possible outcomes are that we avoided a mistake if behind, or that we won the pot, both of which seem okay. To approach poker like a professional, however, we have to understand that checking back a winner when our opponent would have called is every bit as damaging to our long-term earnings as shoving and getting shown a better hand. Or, put the other way, making an active decision which costs us $100 is no worse than missing a $100 opportunity due to passivity.

The action-inaction fallacy in life

Even the example I concocted involving a friend selling her car may be a little contrived, but that was for the sake of clarity. Make no mistake, the preference for passive over active options when facing uncertainty is a real problem in our daily lives, but it’s usually harder to separate from other factors like risk aversion.

A lot of the time, it takes the form of “better the Devil you know” type thinking, remaining in an unpleasant situation because of the fear that the unexperienced alternative might prove even worse, and lead to regret. Dissatisfying jobs and romantic relationships are probably the two most common examples where people take much longer than they should to make the decision to leave, because they kid themselves into believing that staying isn’t also a decision they’re making on a daily basis. Here, too, I’m reminded of the life decision facing me and my wife, which I brought up in the last article: She’s hesitant to pull the trigger on moving to a new city because we might find we hate it there, while see the converse as equally worrisome, that if we stay put, we may never know whether we missed out on an opportunity for a happier, healthier lifestyle.

Image from XKCD

Poker – and gaming in general – has led me to the point of view that “you can’t not gamble.” Changing jobs, leaving a relationship or moving to a new place are all clearly gambles, in that you’re betting on finding something better than the situation you were in before. But if staying feels like less of a gamble, it’s because you’re ignoring the opportunity cost of doing so; as long as you stay, the job, partner or home you could have had may seem hypothetical, but they do exist out there in the world. When you stick with what you have, there is, somewhere, a position that someone else fills, a man or woman who ends up with a person who isn’t you, or a house that some other family moves into.

It’s like a game show, where you’re shown one prize and offered the chance to trade it for an unknown one: Do you want the job you have, or “What’s in the Box?!” If you elect to stick with what you have, the box remains closed, so your potential for regret is lower… and yet, there is in fact something in that box, which may or may not have been better than what you took instead.

The action-inaction fallacy in investment

The idea that you can’t avoid gambling is particularly true when it comes to financial and investment decisions. Holding on to the investments you have when the market changes, rather than adjusting your position may feel like the safer, non-committal course of action, but each day that you hold on to a given stock or mutual fund is equivalent to being given some money and electing to buy the same thing again, rather than something else. Perhaps you avoid even checking in on the performance of your investments, because it makes it easier to pretend you aren’t making daily investment decisions… but that too is a decision. Going back to poker for a moment, checking in the dark is still a decision to check, and checking is as much a decision as betting.

As a specific, personal example, I’m in the fortunate position of being a Canadian working for US companies at a time when the US dollar is worth around $1.35 Canadian. That’s great for me and my family, of course, but it does put me in the position of being forced to do some currency market speculation. Whatever US dollars I earn eventually have to be converted into Canadian funds if I’m going to spend them, but the question is when.

I could convert each paycheck immediately on receiving it, or I could leave everything in US funds until I need it; either of these options would feel like “not gambling.” But they are. Any day on which I convert my money is a bet that the exchange rate is going to come down, and any day on which I do not is a bet that it will keep going up. If I cop out of the responsibility of decision-making by simply converting immediately or as needed, I’m still making those bets, I’m just making them blind. By recognizing that and waiting for days on which the exchange rate spikes to change my money, I’m squeezing a little bit of extra benefit out of this favorable situation.

A caveat about the costs of change

Let me conclude this week’s piece by addressing one obvious criticism, which is that there are often costs involved with making a change. Selling one stock and buying another incurs transaction fees. Leaving a job to search for another results in a period of unemployment. Breakups hurt. Moving is expensive.

None of that changes the nature of the decision, however, it’s just a one more factor to include when weighing the options. If, upon leaving your job, you expect to be out of work for two months, but to be able to find something which pays, on average 5% better for the same amount of effort and stress, then the question becomes how long you expect to stay at the new job. Two months of zero income followed by earning 105% thereafter becomes a break-even proposition after 40 months. If you think you’ll stick around for four years, then, it’s worth it. If you think you’ll be switching again in two years anyway, you should probably stay in the job you have.

Notice that the key here is that we’re considering the two options from a neutral stance which ignores the situation we’re actually in: Would we be better off taking Job A at $20/hour, or two months of unemployment followed by Job B at $21/hour? That’s the way a poker professional looks at the decision to check or bet, and it’s a beneficial way of looking at life… even if it does mean giving up the comfortable belief that you’re only responsible for your actions, and not your inactions.

Next: Seeing Past Variance

Alex Weldon (@benefactumgames) is a freelance writer, game designer and semipro poker player from Montreal, Quebec, Canada.


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