Tuesday, September 24, 2013

Hunches Versus Reason; or, Respectively, Gamblers Versus the House

Stuart K. Hayashi

I think it would be illogical to say, "In real life, you don't need to follow reason. If you go by hunches and following social convention, you will do just fine." To me, saying that is like expecting the house to lose against its gamblers.

Unless he or she is some sophisticated math whiz who counts cards, the gambler likely is not using some sophisticated system of reasoning in making the gambles. Rather, the gambler is going by hunches and gut feelings. Insofar as the gambler wins in a casino, the gambler does so by pure luck. Also note that sometimes social conformity is involved in gambling. If I see one person on a temporary winning streak at a blackjack table, it may motivate me and other casino patrons to try to copy his moves. In the end, that does not improve our odds of winning.

By contrast, the house does not rely solely on luck. The house uses tools and machines built by engineers. Even before having started business, the house had actuaries and other statistical experts calculate the average cost and average revenue the casino is to make for every game played on every slot machine, craps table, and blackjack deal. In other words, the house does not merely rely on luck. The house has both logical science and mathematical probability on its side.

That is why, when you pit gamblers against a competent house, the competent house will always win more money from the average gambler than the average gambler wins from the house.

Insofar as you would rather make out like the house than like the average gambler, it follows that using reason is to your advantage.