Incubator4

Incubator4

Meetup Travelogue - Game Theory Triggered by Texas Hold'em Under Sunflower Seed Economy

Preface#

Last week, I was honored to meet many colleagues in the free shipping area of Jiangsu, Zhejiang, and Shanghai shortly after joining the company. I was surprised that everyone was young and I didn't know them before. In order to break the ice, our logistics sister bought two decks of playing cards. Since the number of people was just right and Texas Hold'em is a game of wisdom and strategy for me (without involving gambling), we started getting to know each other through Texas Hold'em.

Introduction to the Rules#

Game Overview#

  • Texas Hold'em is usually played by 2 to 10 people.
  • A deck of 52 playing cards is used in the game.

Game Process#

  1. Each player places a certain blind bet, usually with two people taking turns to place small and big blind bets.
  2. The dealer deals two hole cards to each player, which can only be seen by the player themselves.
  3. The dealer then deals five community cards that can be used by all players.
  4. Players decide whether to bet, call, or fold based on the combination of their hole cards and the community cards.
  5. The player with the strongest combination of cards remaining in the game wins all the chips in the game.

Comparison of Hand Rankings#

Below is a comparison of the hand rankings in Texas Hold'em, starting from the highest:

Hand RankingDescriptionExample
Royal FlushA straight flush of the highest rank10 ♥ J ♥ Q ♥ K ♥ A ♥
Four of a KindFour cards of the same rank4 ♣ 4 ♠ 4 ♦ 4 ♥ 3 ♠
Full HouseThree cards of the same rank plus a pair7 ♣ 7 ♠ 7 ♦ 2 ♥ 2 ♠
FlushFive cards of the same suit2 ♠ 4 ♠ 5 ♠ 9 ♠ K ♠
StraightFive cards in consecutive rank, not of the same suit5 ♥ 6 ♣ 7 ♠ 8 ♦ 9 ♥
Three of a KindThree cards of the same rankJ ♥ J ♠ J ♦ 9 ♣ 3 ♠
Two PairTwo pairs of cards with different ranks10 ♣ 10 ♠ 8 ♦ 8 ♠ 5 ♣
One PairTwo cards of the same rankA ♥ A ♠ K ♦ Q ♥ 2 ♠
High CardThe highest single card in any combinationA ♠ K ♥ Q ♣ 9 ♠ 7 ♦

Gambling#

Betting#

After the hole cards are dealt, except for the blind bet players, everyone can choose to bet/raise or fold, as this involves game theory strategy.

Hand Strength refers to the strength of your cards, whether your cards are more likely to win this round. For example, in the pre-flop stage, a pair of A's is obviously stronger than getting 2 7's. But if all the community cards have been dealt and three 2's are included, then the hand of 2 7 is obviously stronger than a pair of A's.

When deciding to bet, each player needs to consider the strength of their hand and the possible actions of other players in order to make the best decision.

From a rational perspective, if your hand is stronger, you may have more confidence to bet more because the probability of winning is higher. On the other hand, a weaker hand requires cautious betting to avoid taking on too much risk.

However, let's assume that every player is a master of game theory and considers the optimal solution. They will then judge the strength of other players' hands based on the amount of chips they bet. In this case, you can try to bluff with a weaker hand to bet more chips, making others hesitate to bet and winning their blind bets.

Similarly, with a strong hand, you can use a slow-play strategy to lure opponents with weaker hands into thinking that they are the most likely to win among all players.

Of course, this strategy is not viable in the long run. If your strategy is discovered, others may continue to call, and you will lose more chips. Secondly, you need to have a considerable understanding of your opponents, ensuring that everyone is a "game theory master". Even players who are proficient in Texas Hold'em will take risks because probabilities are only calculations of possibilities. Therefore, you may take on greater risks.

Luck#

Although I admit that the game theory of Texas Hold'em reduces luck to a minimum, it is still a game of chance. Even if you calculate accurately, you may not necessarily win.

Let's take an example. In the dealing stage, I received 2 Q ♣. No one made a big bet in the pre-flop stage, so it is reasonable for me to consider playing with a flush or a high card.

The flop is also good, with two 2's and a 7. At this point, I have a three of a kind and a high card Q, so I have a high probability of winning. According to my strategy, when I have a relatively strong hand, I should play it safe and make it seem like my hand is not that strong. So I choose to slow-play.

The turn is an irrelevant card.

The river is a 7. At this point, I have a full house with my hole cards and the community cards. There are still players in the game, so I increase my bet, hoping that others will raise, giving me a chance to win more. (Here, I considered why others are still in the game, but I still believe that the probability of them having a better hand than me is smaller)

However, I still have the option to fold, which minimizes the sunk cost and keeps others interested in showing their hands. Due to the opponent's reckless play, I overlooked this. After the showdown, the opponent has a 7 in their hand, making their full house 77722, while mine is 22277. I lost this round in the most devastating way, burdened with a debt of 500,000 sunflower seeds.

Strategy#

As mentioned earlier, different people have different playing styles. Although we use sunflower seeds as chips, and they are not even physical, just used for counting tokens, there are still different strategies. Some people play aggressively, while others are more conservative.

Although the results may be different if we were using real money, people's investment strategies and risk management strategies can still be observed, as well as whether they are "gamblers".

Conclusion#

Even though Texas Hold'em is an interesting game of chance, luck still plays a part, and it is important to know when to cut your losses, otherwise you will still lose the game.

Furthermore, I do not advocate or engage in any form of gambling. I strongly oppose gambling, and winning is only a small probability event. Please stay away from these activities.

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