Information Asymmetry in Poker

“As a general rule the most successful man in life is the man who has the best information.”
–Benjamin Disraeli
“Everybody gets so much information all day long that they lose their common sense.”
–Gertrude Stein
Back before I got the poker bug and got interested in writing computer programs, my favorite area of study was mathematical economics. It was fascinating to me that given enough information and the proper filters, a great deal of economic behavior could be predicted if the economist could only figure out which variables were relevant. Good economists realize the value of good information, and as the internet has grown, the amount of available information (good and bad) has grown exponentially.
A great deal of our economy depends on the opinion of “experts” as to where our money should be spent. Expert stockbrokers and real-estate salespeople earn a great deal of money by having more information than the consumer. It’s far more efficient (in theory at least) to trust someone who spends their entire life accumulating information about the stock market and the real-estate market than to spend the few extra hours of our valuable time accumulating and acting on the relatively small amount of data we’re able to acquire.
One of the reasons I was never interested in the stock market is because I would never be able to have as much information as those on the “inside,” or those who spent 16 hours a day researching the market. The amount of information asymmetry— when one party of a transaction has more or better information than another party– was too large, and the market insiders would always have an edge over an “outsider” like me.
Betting on sports, however, was a market where a different kind of information asymmetry existed. As a former football player, I knew which variables were relevant, and all of the data available to the so-called experts was also available to me. A small group of insiders may have access to injury information that is unavailable to me, but for the most part, any football bettor has access to the same information as any other bettor or line-maker. To succeed as a football bettor, I only had to be better at data analysis than my competitors.
All of this gets back to the question, “where does your edge come from?” In any gamble, be it real-estate, stocks, or sport-betting, a positive expectation comes from doing something better than those you are betting against. Given that the same data is available to all parties in a particular transaction, the positive expectation comes from the one who better analyzes the data related to the transaction in question.
In poker, the transaction in question is the hand that you are currently involved in. Thus, the poker player with a positive expectation in a given hand is the one who does something better than his opponents. Usually the something revolves around information concerning the transaction. Since the amount of information asymmetry in poker is huge– it’s possible for one player to have a great deal more (and better) information than his opponents– the edge in poker comes from having more information than your opponents, and better analyzing this information.
Below is an analysis of the different types of information involved in the poker world, and how these types of information contribute to the economic concept of information asymmetry in poker.
The Three Types of Information in Poker
While the term “information” usually applies to a broad spectrum of concepts, it seems to me that there are different categories of information, based on how this information is acquired. Here are three different categories for information in poker, based on my observation of the game:
1. Poker knowledge
Poker knowledge refers to information regarding odds and probability, hand distributions, and starting hand strength. This type of information is usually learned by studying books and the mathematical aspect of poker, although it can also be learned through experience. This category of information describes basic facts that are independent of game conditions, and represent the “fundamental” concepts of poker.
For example, it is a fact that Q7o is a slight favorite against a random hand heads up. This basic fact, if known by one player and unknown by the opponent, gives the knowledgable player a slight edge.
Information asymmetry, as related to poker knowledge, is based on the fact that one player has studied poker more than his opponents. Like the sports-betting world, this information is publicly available to all players, and the player that spends the most time analyzing the information (if done intelligently) will have the biggest edge.
The surprising thing about poker knowledge is the amount of disagreement over basic concepts. A quick read of this thread shows that two people who have spent years thinking about the game can’t even come to an agreement about the optimal strategy for playing AQo.
The lesson here is that if two experts cannot even come to an agreement about fundamental poker concepts, the level of information asymmetry that is possible between an expert poker player and and average player can be very large.
2. Poker experience
Poker experience refers to the amount of information absorbed or collected during a player’s time at the table; it concerns mainly internalized information that applies to specific situations. While poker knowledge relates more to rules independent of game conditions, experience teaches an observant player how to use the information given off by a group of signals communicated by a table full of players. The infinite number of patterns and rhythms of the game can’t be learned from a book, and the poker player as information collector is rewarded for his awareness of these subtle aspects of the game.
Physical tells are an example of information that can only be learned through experience. While a player can learn general concepts like “strong means weak” and “a player who covers his mouth with his hand after a bet is usually bluffing,” there are an infinite number of subtle, player-specific tells that can be learned from a book, the many ways these players uniquely communicate these tells cannot be summarized in a book.
The information asymmetry in the experience category is proportional to the amount of experience possessed by the players involved in the game. However, an observant, intelligent player who does a good job of analyzing his collection of experienced data can “catch up” to a player with far greater experience who is less observant.
In terms of gaining an edge in experience, there is no proxy for putting in time at the tables and being a part of the infinite combinations of variables that occur in any poker game.
3. Opponent specific information
Like poker experience, opponent specific information comes from observation of the behavior of individual players over time. In the past, this type of information could only be obtained by physically watching your opponents play poker. Today, players can obtain player specific information on a very small subset of players by watching poker on TV (although this information will only be useful in the small chance you will face these opponents in the future). For brick and mortar poker, the only real way to collect opponent specific information is to spend time playing against a wide range of opponents (although floormen and friendly regulars can point you in the right direction).
Thanks to recent developments in the world of online poker, players can obtain a huge amount of player specific data about their virtual opponents without even observing a poker game. Thanks to the online poker hand history and data collection tools like Poker Tracker, poker players can collect extensive data on their opponents just by clicking their mouse button. A diligent data collector can “observe” (virtually) the details of the way every single hand was played on an online poker site (shameless plug: check out my Poker Tracker Guide to find out how to do this).
Since relatively few players are using these opponent specific data collection tools, there exists a huge informational advantage for the players that do. If I know the tendencies of every player at the table and my opponents do not, it creates a huge information asymmetry that gives me a significant edge over these opponents.
There are many types of information in poker, but the three categories above provide a framework for thinking about where a poker player’s edge comes from. The above discussion illustrates why professional poker players come from such a diverse background: since all poker players have the same amount of information available to them, every one has an equal chance of becoming an expert in poker. Those who have the biggest expectation are those who collect the most information and figure out how best to use that information to make decisions.
In other words, poker is a game that heavily rewards those who put effort into the collection and analysis of information. Just think of it this way: every poker book you read, every hand you observe, and every time you use Poker Tracker, you are increasing your edge over your opponents.

Poker Reviews: Blogs, a DVD, and Books

“No profit grows where is no pleasure ta’en;
In brief, sir, study what you most affect.”

–William Shakespeare
Apologies to my loyal readers, as this post marks the first in three weeks, but working for the fastest growing Online Poker Room in the world has left me with little time and even less energy. I can happily report that the few sessions I’ve put in at the tables (virtual and real) have been extremely profitable, and the cards have been kind.
I haven’t had any poker epiphanies, but I thought I’d run through some stuff that’s been on my mind or that has made me think a little bit harder about my game.
Full Tilt Poker: bigger and better every day
If you haven’t noticed, hand histories are now available for Full Tilt Poker ring games and are now supported by Poker Tracker. It took a while, but we got there!
Also, congrats to my man Bill Rini who has taken the plunge and signed his soul over to Full Tilt Poker. Bill will be a great addition to the Full Tilt team, and I look forward to building the site along his side.
Old school Online Poker Wisdom
Props go out to one of the few remaining original heroes of RGP, Mr. Andrew Prock. For those of you that are unfamiliar, Prock’s blog is an infrequently updated treasure chest of nuggets of superb limit holdem wisdom. Rarely do I find myself reading a Prock post where I don’t find my self saying, “damn, why didn’t I think of it like that.” Enough with the praise, here are two recent posts that had me awestruck at the simplicity of optimal strategy in such a complex game:
Prock on “The Wall”
“The Wall” is a pretty standard strategy used in limit games by most of the better players. It is a very simple strategy, and applicable to a wide range of hands and situations.

  • When you have the initiative, bet.
  • If you lose the initiative, call.

Prock on “The Biggest Leak”
For most average players, their biggest leak is that they call too much under all circumstances. You see this in the low limit fish on every round of play. You see this in the high limit fish postflop tenacity.
Both of the above seem so common-sensical to be obvious, but meditating on them a bit makes one realize how many levels of thinking are involved in limit poker. I’ve always been a strong advocate of Occam’s Razor, the principle which states: Of two equivalent theories or explanations, all other things being equal, the simpler one is to be preferred.. Maybe I’m a romantic game-theorist, but I think Occam’s Razor applies to games: the simplest strategy is usually the best. Thanks for the wisdom Andy.
Poker on DVD
Final Table Poker With Phil Gordon
I finally got a chance to check out Phil Gordon’s Poker DVD, and was pleasantly surprised by both the quality of the production as well as the strength of the instruction. In short, the DVD is an excellent walk-through of the way a world-class tournament player (although some people might argue otherwise, I truly believe Phil is one of the best NL tourney players when he’s got his A game) thinks about many difficult situations in the context of a tournament.
The DVD takes you through Phil’s thought process at the final table in a simulated WPT event, and covers a variety of different situations that arise in every tournament. For stone-cold beginners looking to learn how to play tournament poker, this is a great start, since it really illustrates the many levels of thinking involved in no-limit tournament play, while also focusing on fundamental concepts such as pot odds and starting hands. For intermediate players, it will help them improve the way they think about their final table play– the first time I was caught at a final table against a group of tough players, I wasn’t sure how to adjust my game from survival mode to attack mode, and ended up being outplayed by more experience players. Final Table Poker prepares the intermediate player for the wide range of situations that can come up at the final table, giving the player some “virtual experience” to draw on when they make it to the final table in a real tournament.

The DVD’s biggest strength is that it’s very well suited for “situational learners.” Many people have difficulty immersing themselves in a poker tournament– there are so many variables to account for, and books that try to create a context for decision often fall short at attempts to immerse the reader in the environment. For example, although Harrington’s books offer some great problems to ponder, it’s usually difficult for me to get a feel for the table from lead-ins like:
Situation: Late in a major tournament. The table is a mix of conservative and aggressive players.
The biggest strength of Final Table Poker is that you’re forced to sit behind Phil for an hour and a half, and have no choice but to observe the tendencies of the other players. Thus, when the decision points come up, you can understand the decision in the context of the game far better than you can in any book.
For a much more in-depth review, I recommend checking out Bill Rini’s review here. Bill is rarely wrong with his reads, and his review is on the money.
Bottom Line: If you’re a a newcomer to tournament poker, an intermediate player who lacks final table experience, or consider yourself a “situational learner,” you’ll get your money’s worth from Final Table Poker. While there probably is nothing new for experienced tournament players, the DVD is genuinely funny and entertaining to watch.
Poker in Print
One of a Kind: Rise and Fall of Stuey Ungar
I just finished “One of a Kind: Rise and Fall of Stuey Ungar” the Nolan Dalla/Peter Alson, and I’m still not quite sure what to make of it. The book is a biography of Stuey’s life from childhood to death, held together by actual quotes collected by Dalla in the 90’s before Stuey’s death.
Dalla and Alson tell many great stories about Stuey’s incredible talent for gambling and insatiable appetite for action, but seemed hesitant to explore the dark side of Ungar. The book offers many explanations for what made him so great at any card game he played, but there is little exploration of the demons that drove Stuey to his many vices. The authors leave it to the reader to determine Ungar’s propensity for things that hurt the people that cared about him.
Bottom Line: “One of a Kind” was an interesting read, and the interspersion of quotes from “The Kid” himself give the reader a chance to get inside the mind of Ungar. I’m usually not a huge fan of biographies, and I found some parts of the book to be uninteresting, but there are enough great stories in it to make it a worthwhile read.
The Professor, The Banker, and the Suicide King
I won’t say too much about this book other than “read it.” This one was difficult to put down from start to finish, and contains some great stories told by a great writer. Hats off to Michael Craig for capturing the crazy world of ultra-high-stakes poker. According to a reliable source, Craig was able to get the real inside story behind many of the craziest bets and biggest games in poker over the past decade. I thoroughly enjoyed reading Craig’s tales, some of which were so crazy that they seem almost like folklore.
Alright it’s time to hit the tables. I still have to plow through Harrington on Hold Em Volume II and Barry Greenstein’s “Ace on the River,” but that’ll have to wait until after I test my luck against the fish. Good cards to everyone not at my table, and thanks for reading.


BG organized a poker tournament this Sunday in memory of Jason’s friend, Charlie Tuttle.
I encourage everybody to sign up, even if you don’t have the time to play. The prize pool goes to a good cause.

WPBT “Charlie” Tournament
No Limit Hold’Em

Tournament 9680072
Sunday, July 17th
18:00 ET
$20 buy-in

Look undet the Private Tourneys tab. The buy-in will go to
Charlie’s family to do with as they like.

Climbing the Limit Poker Mountain

“Learning is not attained by chance, it must be sought for with ardor and attended to with diligence.”
–Abigail Adams
Over a year ago, I wrote about reaching a plateau in my knowledge of limit poker. The light-bulb moments of discovery so common during the head-first plunge into holdem had become so infrequent that I felt my knowledge had reached some sort of plateau. I knew there was much more to learn, but couldn’t figure out how to climb any higher, advancing my knowledge and reaching the peak. And here I am a year later, playing much higher limits and having a much better “feel” for the game, but I still feel like there’s a long way to go to reach the top of the mountain.
During last year’s WSOP, Jesse May investigated the freakish playing style of Ted Forrest. At the time, I hadn’t seen much of Ted’s play, but what I had seen impressed me. I can’t explain what it was, but every time I saw Ted, it looked like he knew something that his opponents didn’t know. Some sort of poker secret that gave him a little bit of an edge over the other world class players sitting at his table.
And then I read this paragraph:
“But as far as I can tell, about eight to ten years ago Ted Forrest got into running poker simulations through a computer. He got together with the Eight or Better Kid, that maniacal pudge faced infuriatingly always right paranoid control freak from the Midwest USA, and they started running simulations that nobody had thought of. Weird simulations, flexible maybes, particular situations with certain kinds of players involving percentages of things that might possibly be happening. I don’t know what I’m talking about. But I seen what it did to them. I seen strange looks on their faces and strange glints in their eyes. They don’t play like everybody else, and I seen them spin people round and round and round.”
Simulation. And hard work. Stuff that nobody’s ever done. All of these things struck a chord, and I thought I finally understood Ted Forrest’s ever-present mischevious smile.
Rewind to May of 2003. After playing 30,000 hands of Turbo Texas Hold Em on my PC, I strolled into Hollywood Park casino, ready to take on the $2-$4 game. Beating other players seemed easier than squeaking out a small edge against the house at the Blackjack tables, and I figured nobody else at the $2-$4 table even knew what Turbo Texas Hold Em was. I had to be at least even money in this game. I’d never played online, so this would be my first time playing for real money.
After figuring out how to post the blinds and act in turn, I started to look beyond my cards and observe the other players. I noticed that they played a lot worse than the computer players on Turbo Texas Hold Em. I noticed that I seemed to be the only one who folded more often than called, and that the concept of “implied odds” and “pot odds” seemed unknown to the other players. They all seemed to have one thing in common: they were there to gamble.
As I continued to gain experience at the live tables and the virtual tables, I began to see that my advantage over my opponents came mostly from two things: discipline and knowledge accumulated away from the table. Unlike my opponents, I wasn’t there to gamble. I was there to play my best poker and the discipline to throw away my cards when I didn’t have the best of it gave me an advantage over people who were happy to put their money in on a coin flip. These same opponents also weren’t interested in studying the game, putting in the long hours away from the table thinking about such fine-grained concepts as how much equity suited aces have in multi-way pots.
The only real advice I ever got about poker was excellent, and came from a fellow card-counter who had made the switch to poker. His advice: “move up in limits as fast as you can.” He didn’t specify what “you can” meant, but my interpretation was “as fast as your bankroll will allow.”
As my bankroll grew and allowed it, I moved up in limits. The players were much tougher, but still lacked discipline and had flaws in their game when it came to the mathematical side of the game. Experience is a great teacher, but most people have a hard time with probability, odds, and mathematical concepts in general. My tough opponents still seemed to make a lot of small mistakes despite the fact that they had been playing this game for years.
The stakes were getting higher, and some of the players were getting better, but still, most of my opponents came to the table to gamble. I continued to study the works of two players who seemed to understand the value of computer simulations, Abdul Jalib and Izmet Fekali. Both men had come up with strategy suggestions that differed significantly from that offered by the old-school poker theorists such as Sklansky and Malmuth, and they seemed to be right.
Every time I sat down at the table against opponents with more experience than me, I was bolstered by the confidence of countless hours of studying the game, as well as the results of millions of simulated hands that my opponents had never seen. I felt that I was a “student of the game,” and combined with discipline and focus, this made up for any disadvantage I had in experience.
At this point I was convinced that simulations seemed to hold the key to gaining and edge over my opponents. They had experience and knowledge, but if even the mighty Sklansky couldn’t figure out optimal strategy, then there was much to be learned from simulations. Experience was important too, but great poker players are not made by experience alone.
Back to Ted Forrest.
“I don’t know what I’m talking about. But I seen what it did to them. I seen strange looks on their faces and strange glints in their eyes. They don’t play like everybody else, and I seen them spin people round and round and round.”
How do you get an edge over people who have mastered this game? If all of the experts know the odds and how to exploit their tiny edges, how do you beat the experts? What is the difference between the best players in the game and the good players in the game?
The tiny percentages of Expected Value that accumulate by making the right play over and over again in the toughest situations differentiate the great from the good. I’m convinced that these tiny edges can be discovered through careful and thoughtful simulation.
Now that I’ve accumulated some experience and studied all the works of the great minds of poker, it’s time for me to make some of my own discoveries. As an undergrad, I shored up my knowledge of many subjects, carefully studying the findings and contributions of the experts to their respective fields. In graduate school, it was time to take these concepts and discover something on my own– make my own contribution to the field through new ways of applying what I’d learned as an undergrad.
So I’ve begun my ascent toward the peak of limit hold ’em knowledge. Running simulation after simulation and thinking hard about the results of each one isn’t always fun, but the end of the climb is always the hardest part. If I’m ever going to find an edge over the great players, it’s not going to be because of my experience or natural card sense. However, I do think I may be able to “out-study” them.
All simulation and no play makes HDouble a dull boy, but hopefully a dull boy who knows the game inside and out.
What are you doing to improve your game? What are your opponents doing?

Blurred Vision

“As soon as questions of will or decision or reason or choice of action arise, human science is at a loss.”
–Noam Chomsky
The last couple of weeks have been a blur, as the action at the Full Tilt offices has escalated in order to keep up with the performances of our players at the World Series. As of Wednesday, the 27 Full Tilt Pros had won 11.27% of the total prize pool, even though they represent less than half a percent of the total number of entries. The final tables have been dominated by well-known pros this year, and my initial guess at the size of the advantage for professionals may have been understated. More on that in a future post.
Anyway, I’ve been working so much that my time at the tables has been extremely limited. I did, however, make it to Vegas last weekend for another taste of WSOP insanity. Here are some quick highlights, which I’d be happy to elaborate on if anyone would like to hear more:

  • Playing $20-$40 with a “rock” (thanks to -EV for the explanation):
    “The must-straddle element is carried out thusly: one big bet worth of chips is wrapped up in rubber bands, or designated in some other fashion and called “the ROCK.” Whoever has the ROCK is required to straddle when they’re UTG, using the rock as their bet. The ROCK goes into the pot and whoever wins that pot then must straddle when they’re UTG. Of course additional straddles and/or blind caps are fully encouraged.”
    I’m all for high-variance games, but there were 3 players at this table under 25, and needless to say, they were very good. I soon ended up swimming for calmer waters, but at least I can say I played with a rock.
  • Being introduced to John Juanda as an “excellent limit player,” to which he responded “Oh, you mean not like me?”
  • Pumping up a manic, short-stacked final-table Phil Gordon after seeing the chip leader win a three-way all in with 99 (sucking out on JJ and QQ). Unfortunately, Phil’s bracelet will have to wait a bit longer.
  • Hanging with the blogger contingent: a half-insane Pauly running around after 3 weeks of non-stop coverage, Otis at the start of his Vegas run crushing the $10-$20 game, “Action” Steve Hall snapping pictures of any poker player in a skirt, and smooth Amy Calistri taking it all in and prowling around looking for her next story.

It’s tough to explain the environment there, although if they ever created a “Gambling Summer Camp,” it would probably resemble the scene at the Rio. Of course, I ended up getting whacked with the wrong end of the variance stick, and several bad beats sent me home with a lot of great experiences but a slightly diminished bankroll.
The only other live poker I’ve played in the past two weeks has been on the past two Friday nights, where several poker bloggers gathered for the first two sessions of the LA POKER BLOGGERS HOME GAME. That’s right, yours truly has finally organized a home game for the local poker junkies, and the action proved to be as furious as one would expect from the heavyweight lineup:
FHWRDH: fellow Full Tilter and tough tournament player, you don’t want to be calling his raises without strong cards and a plan
FactGirl: FHWRDH’s partner in crime, not afraid to gamble
Bill Rini: WPBT winner’s table presence inspires fear in potential callers
The Film Geek: The kid never takes a hand off, and has the potential to be a superb tournament player when he finally grows his bankroll
Absinthe: thoughtful writer always seems to save his chips for a better spot, and always seems to find it when it matters
Chris Danek: fellow full tilter and tournament specialist, super-competitive and hard to put on a hand.
LKim: organizer of the infamous LKim homegame, LKim plays a near-maniacal style and bludgeons people with his stack when he manages to accumulate chips early.
Mrs. Double: great instincts, no fear, and unburdened by poker books, you can’t put this Swede on a hand and her reputation as an “action” player makes her a tough opponent.
I’m anxiously awaiting the arrival of StudioGlyphic, who’s off exploring a continent Far East of here, and Grubby, who’s off exploring the slot machines not so far east of here.
The game is low stakes, and was started primarily as an excuse to learn non-holdem games and hang out with people I like and respect. So far I’ve learned a bit about stud-hi lo, but the biggest lesson I’ve learned comes from Mrs. Double, who has completely dominated the two no-limit holdem tournaments concluding each session. Her domination was so complete that she knocked out 13 of the 15 players in the two games combined, taking first last night and second in the first game.
So, how does a player who’s never read a poker book and has no knowledge of odds and starting hands guidelines dominate a group of players who are versed in poker strategy? Luck is a huge factor of course, but I think two major factors in her play have been the primary reason for her domination:
Willingness to Gamble: by playing without fear and moving a lot of chips around, tournament players create action on their good hands, and a chance to double up when they’re drawing. The old saying, “You have to give action to get action” is true especially against observant, skilled players, so the action player ends up facing tough calls against players who want to gamble with their marginal hands. If the action player holds some cards, they will collect a lot more chips than a tight player (see GUS HANSEN for more).
Simplifying the game: although odds and knowledge of hand-strength relative to stack size is important, tournament no-limit hold em is really a simple game. The game can almost be reduced to two simple questions: Do I have a better hand than my opponent? and Will my opponent call a big bet? If you can answer these two questions throughout the tournament (and get lucky a couple times), all the knowledge about pot odds and hand strength is relatively unimportant.
Of course, I believe the “delta theory” also explains much of Mrs. Double’s success: in a group of opponents who play similarly, the player who plays “the most differently” often has the biggest advantage. Mrs. Double’s unconventional style definitely differentiates her from the crowd of poker bloggers, and therefore gives her an advantage.
Of course, a run of great luck and excellent cards is probably the most important component of her success. But I’m a little biased, and it’s nice to think that superb card sense and great play were the real reason for the domination.
Check out Bill’s blog and Absinthe for a more detailed writeup of the game.
I’ve been extremely lucky throughout my life, and I’ve never been one to enjoy the “little things” in life. I’d like to think the extremely saddening events chronicled by a couple of fellow poker bloggers have helped me to put things in perspective and take joy in the small moments chronicled above. But my thoughts and my heart have gone out to Iggy and especially to Jason, who are dealing with things that seem impossible to accept. The best lesson poker has taught me is that all we can do is play the hand we’re dealt the best we can.