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# How to Win with Game Theory & Defeat Smart Opponents | Kevin Zollman

Discussion in 'Educational Resources' started by dealmaker, Jan 26, 2018.

1. ### dealmaker

1) in zero sum games act counter intuitively

2) adopt a strategy that minimizes maximum loss

3) there is no one size fits all strategy

2. ### 777

I am sure game theory and game theory type thinking has a place, especially at places like Renaissance Technologies.

However, as a side note, trading is not a zero-sum game because money continually leaves the game to commissions, fees, bid/ask, etc.

Illustrative examples:

Poker with a rake is not zero-sum.

One on one poker where there are no fees so that whatever one player loses the other wins is zero-sum.

(I prefer not to go back and forth on this. Zero-sum has an exact definition and so does game theory)

https://www.merriam-webster.com/dictionary/zero-sum

Definition of zero-sum
: of, relating to, or being a situation (such as a game or relationship) in which a gain for one side entails a corresponding loss for the other side dividing up the budget is a zero-sum game

Last edited: Jan 27, 2018
Xela likes this.

playing poker at a table in a casino with a 12 % + rakeback is negative sum game LOL unless when you sit at the table there's people that are new and dont know what theyre doing then you can catch a few bucks

4. ### 777

Poker with a rake is minus-sum / negative-sum.

However, some minus-sum / negative-sum games can be beat.

Terms like zero-sum do not signify if a game is beatable.
_____

Definition of zero-sum
: of, relating to, or being a situation (such as a game or relationship) in which a gain for one side entails a corresponding loss for the other side dividing up the budget is a zero-sum game

Last edited: Jan 27, 2018

a great example is baccarat banker has a 4% positive edge until you add the -5% commission then its -1%. people should play banker at baccarat just to see how much 1% really is

6. ### 777

[QUOTE="dealmaker, post: 4593322, member:

1) in zero sum games act counter intuitively

2) adopt a strategy that minimizes maximum loss

3) there is no one size fits all strategy[
/QUOTE]

..........

Nice video but I am not sure if you misunderstand a few things so I offer comments:

1. The correct strategy can be either intuitive or counterintuitive.

3. Game theory wise, one size does fit all opponents in poker, tic tac toe, rock-paper-scissors , etc.

Perhaps one reason the video maker was saying that against truly bad opponents there is no one size fits all strategy is the implication that an exploitive strategy may often be better here.

___

Illustrative example:

A. In a game of rock-paper-scissors, game theory would have you throwing each option one third of the time so that you would be unexploitable.

(Well.. theoretically unexploitable.. don't give off tells or get cheated, etc)

B. As a non-game theory exploitive strategy, we might throw extra paper if we knew our opponent favored rock; extra paper if we had a "tell" indicating rock was about to be thrown; etc.
____

Side note:

Poker players often deviate between uninformed strategies and informed strategies.

Last edited: Jan 27, 2018
Xela, Sprout and dealmaker like this.
7. ### fordewind

apply gambling theory

8. ### ironchef

But someone on ET just PM me that it is a lie, it is NOT a zero sum, or negative sum game, the winning is not taking money away from counter parties and everyone can win trading options?

Now I am confused. Maybe some of you pros can straighten me out?

9. ### rvince99

None of this is a "zero sum game."

Value is created left and right.

10. ### 777

When I said the game theory solution to rock-paper-scissors was to throw each option one third of the time, I meant to say "randomly throw", like with a random number machine. Obvious reasons.

#10     Jan 27, 2018
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