Thursday, 15 March 2012

What is Liar's Poker?

Michael Lewis Liar's Poker opens with the description of a famous wager made on a Wall Street trading floor in 1987. The CEO of the (soon to be bankrupt Salomon Brothers approached his star trader with an outlandish challege, 'One hand, one million dollars, no tears'. The 'hand' or game he was referring to was 'liar's poker (aka 'cheat' or 'spoof'in the UK). It involved no playing cards but a combination of statistical calculation and bluffing (convincing your opponent of a falsehood).
Players hold random dollar bills with close attention to their own bill serial number. The objective of the game is to bluff the opponents into believing that your bid does not exceed the combined sum of all of the serial numbers...
The game requires great mathematical skill because the probability calculations are extremely complex. But even more essentials is a 'poker face', the ability to lie convincingly.
if one player bids three 4s, he predicts that within all of the dollar serial numbers held by all players, there are at least three 4s. If the player's bluff is not called, the next player must either bid a higher frequency of any other digit (five 2s) or can bid a higher number at the same frequency level (three 6s).
listen to a reflection on the psychology ‘Liar's Poker’

And the Saloman brothers bet? The star trader responded, 'Make it ten million!', correctly calculating that his boss would not risk such an amount. But the bluffing can eventually have dire consequences as we all learned in September 2008.

1 comment:

  1. Maybe the people posting about online poker being rigged ought to read the first article. LMAO at those guys. Knowing them they may not get the context of the article. holdem poker

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