How to win at poker using game theory

A review of the key papers in this field

The main papers on the issue

The first attempts

mile Borel: Applications aux Jeux des Hazard (1938) John von Neumann and Oskar Morgenstern : Theory of Games and Economic Behaviour (1944)

Extensions on this early model

Bellman and Blackwell (1949) Nash and Shapley (1950) Kuhn (1950) Jason Swanson: Game theory and poker (2005)
Sundararaman (2009)

Jargon buster

Fold: A Player gives up his/her hand. Pot: All the money involved in a hand. Check: A bet of Zero. Call: Matching the bet of the previous player. Ante: Money put into the pot before any cards have been dealt.

mile Borel: Applications aux Jeux des Hazard (1938)

How the game is played

Two players Two cards
Each card is given a independent uniform value between 0 and 1 Player 1s card is X, Player 2s Card is Y

No checking in this game No raising or re-raising

How the game is played

Betting tree: outcomes for Player 1
Fold
Ante 1 Player 1 Bet [B=1] Player 2 Fold +1

-1
Call 2

First both players ante 1

The pot is now 2

Player 1 starts first

Either Bets or Fold
Folding results in player 2 receiving 2 wins 1

Player 2 can either call or fold.

Folding results in player 1 receiving 3 wins 1

Then the cards are turned over

The highest card wins the pot

mile Borel: Applications aux Jeux des Hazard (1938)

Key assumptions
No checking XY (Cannot have same cards) Money in the pot is an historic cost (sunk cost) and plays no part in decision making.

mile Borel: Applications aux Jeux des Hazard (1938)

Key Conclusions Unique admissible optimal strategies exist for both players
Where no strategy does any better against one strategy of the opponent without doing worse against another its the best way to take advantage of mistakes an opponent may make.

The game favours Player 2 in the long run

The expected winnings of player 2 is 11% when B=1

The optimum strategies exists

player 1 is to bet unless X<0.11 where he should fold. player 2 is to call unless Y<0.33 where he should fold

Player 1 can aim to capitalise on his opponents mistakes by bluffing

John von Neumann and Oskar Morgenstern : Theory of Games and Economic Behaviour (1944)

New key assumption:

Player 1 can now check

New conclusions
Player 1 should bluff with his worst hands The optimum bet is size of the pot

One Card Poker

3 Cards in the Deck {Ace, Deuce, Trey} 2 Players One Card Each Highest Card Wins Players have to put an initial bet (ante) before they receive their card A round of betting occurs after the cards have been received The dealer always acts second

One Card Poker

Assumptions
Never fold with a trey Never call with the ace Never check with the trey as the dealer
Opener always checks with the deuce

One Card Poker

Conclusions
Dealer should call with the deuce 1/3 of the time Dealer should bluff with the ace 1/3 of the time If the dealer plays optimally the whole time, then expected profit will be 5.56%

Thank You for Listening!