Risk adversity, flipped

Hat tip: CMoh


In heads-up poker games, if both 22 and AK were to go all-in pre-flop, they would be evenly (very close to 50/50) matched. In real play, however, 22 loses to AK by a big margin. This is because theĀ  betting and folding options are worth a lot more to AK than to 22, which is to say that the unknown flop, turn and river introduce big variances into the AK’s expected return.

In that sense, AKs are preferable because their riskiness boosts the value of options possessed.

Lesson: seek risk with respect to which you possess options!

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