While our beloved Kula is moving, I'm filling in to give the Kula Krew a place to gather for Koffee, Kuddles, and Konversation. In today's offering we explore testicular fortitude - a common topic here at DKos - through the lens of poker. Having a big pair, and not of cards, is not always an edge in poker. Sometimes, playing "small ball" is better. The reasoning, which will come as no shock to Morning Feature readers, lies in game theory.
And it suggests President Obama faces a curious dilemma.
Note: The solution for this week's Kossaku is in today's tip jar.
More below the fold....
The jobs bill was "small ball."
Nobel laureate economist Paul Krugman has been writing since November that President Barack Obama must be big and bold in handling the economy. Other economists, and many Kossacks, have suggested the same. Indeed much of the criticism of the stimulus bill was that it was too small, especially on the spending side, to do much good. And I wrote Tuesday that I agree with those criticisms ... if we assume this one bill is all Obama will get to do on the economy.
Given that assumption, I agree with the criticisms even more in light of the conference committee version of the bill. The conference committee's basic strategy seems to have been to compare the House and Senate versions and remove anything that wasn't already in both. The result was a smaller bill than either chamber had approved, and so far as I was able to learn, almost of those cuts came on the spending side. For those of us who think there was too little spending in either bill, that wasn't good news. But it does mean Obama should have the jobs bill on his desk by Friday, before Congress recess for President's Day.
Whether that works out will depend in part on what Obama does next, on whether he's decided to adopt "small ball" as his basic strategy, and whether that strategy fits the political and economic situation.
Big balls aren't always better.
We read often here on DKos that President Obama and Democratic leaders need to "grow a pair" to deal with the Republicans. As a woman I find it odd that courage is associated with scrotal size, but I've heard the metaphor all my life so I suppose at least men find some meaning in it. And I agree that courage is a cardinal virtue, especially in politics.
But the willingness to go "all in" on policy is not, in itself, a sign of wisdom. On Monday I examined the Chicken game, and why playing Chicken with an opponent who has nothing to lose by crashing is a fool's errand, no matter which of you has more courage. Bush played Chicken with the Arab world, not only willing but downright eager to go "all in" and stake his entire presidency on a war in Iraq. And when it was going poorly and his party lost Congress in 2006, Bush's response was to raise the bet with his "surge" strategy.
These decisions were certainly ballsy, but were they wise? Most Kossacks would scream "No!" And I'd scream it with you. Big balls aren't always better.
"Small ball" is often smart strategy.
Anyone who's watched televised poker, and most of us did at some point during the height of the poker craze, knows the phrase "all in." It's a big, bold, ballsy move: betting your entire tournament bankroll on the outcome of a single hand, and often when you've seen only your first two cards. There are advantages to moving "all in" that early in a pot. Depending on the tournament situation and the cards you hold, it may be a correct play, or even the only correct play. It also makes for great TV drama, as the program usually cuts away to commercial to let the tension build, and then the dealer slowly turns over the Flop, Turn, and River cards while cameras capture every smile, frown, flinch, bellow, and fist pump as the pot is resolved.
But if you're a good player - that is, better than the other player(s) in that pot - "all in" is rarely the best play. A novice can quickly learn which starting cards are playable. The skill of poker lies in being able to assess the strength of your hand as the pot develops. That relies on knowing what kinds of hands your opponents play and how they play them in different situations, knowing the probabilities of drawing to a winning hand or being outdrawn, on the size of the bet and the amount of money in the pot (pot odds), how often you'll be able to win a big pot if you do draw to a big hand (implied odds), how often you'll have to fold to a big bet before all the cards are dealt (reverse implied odds), and several other factors.
The better a poker player is at estimating and weighing those factors, the more likely he/she will make good decisions. A stronger player's only advantage vs. a weaker player is that the stronger player is more likely to make better decisions. And the phrase "more likely" is very important. Poker is a game of incomplete information, and even the best players can make the best decision possible on the information available ... and be wrong.
For example, if you hold Ace-King on a flop of Ace-King-Six "rainbow" (three different suits), and your pot-sized bet is met by a pot-sized raise, the reasonable assumption for a competent opponent is that he has:
- A weaker Ace (like Ace-Queen, Ace-Jack, or Ace-Ten);
- Ace-Six for a smaller two pair than your Aces and Kings; or,
- Pocket Aces, pocket Kings, or pocket Sixes for three of a kind ... and you're in deep trouble if you stay in the pot.
You can use Bayes Theorem to work out the probabilities for each, and determine he has 24 possible hands for #1, 6 possible hands for #2, and 5 possible hands for #3. That's 30 possible hands where you're almost certain to win vs. 5 where you're in deep trouble. All other things being equal, the math says you should stay in the pot. But you could be very, very wrong.
Or you could be right, and still get outdrawn in the last two cards.
What is "small ball?" Simply, if you make better decisions than your opponent, your advantage increases when you can make more decisions.
You won't make the correct decision every time, as shown in the example above. And you can make the correct decision and still be undone by the luck of the cards. (This is what Biden meant with his "We can make all the best decisions and still get it wrong 30% of the time" comment.) But the more decisions you can make, the greater your advantage over a poorer decision-maker, because you let the Strong Law of Large Numbers work in your favor. Given enough decisions where each time you're likely to make the better decision, you don't have to get lucky to win. Instead, you have to get unlucky to lose.
That means you'd rather not get "all in" early in the pot. You'd like to keep the bets small enough that you can still make decisions - bet, call, raise, or fold - as the pot develops. Each extra decision point adds to your advantage, so you want as many decision points as possible.
When is "small ball" better?
Obviously, "small ball" is only to your advantage if you make better decisions. A weaker player would rather get "all in" early in the pot, so he/she doesn't have to worry about being outplayed later as the pot develops. More generally, the weaker decision maker would prefer to make an all-or-nothing decision early - rather than lots of intermediate, incremental decisions along the way - because that means there are fewer chances to make a mistake.
Less obviously, however, "small ball" is only to your advantage if you will get lots of other decision making opportunities. In poker, if you have too few chips to play deep into a pot and fold, and still have enough chips left for another pot later, it's often better to move "all in" early even if you're the better decision maker. The Strong Law of Large Numbers only works for large numbers. If you can't afford a large enough number of decisions, you have to make the best one decision you can, then "push and pray" ... staking everything you have on that one decision and hoping it works out well.
Should President Obama play "small ball" on the economy?
Let me first be clear: that's not asking whether President Obama should do as little as possible. Obviously our economy is in a serious crisis, the worst since the Great Depression, and the total government commitment to solving it will have to be "big and bold," as Paul Krugman and almost every other economist agrees. That's not the question here.
Rather, the question is whether President Obama should make that "big and bold" commitment all at once, on a single all-or-nothing bill, or whether he should spread that "big and bold" commitment over several bills, so he has more decision making opportunities versus GOP obstructionists.
The answer to that depends on two questions. First, is President Obama a better decision maker, in terms of policy and in terms of the politics of getting legislation passed, than the Republicans? And second, will the economy give him enough time to pass several bills, or are we likely to see a complete collapse if he doesn't get it all done immediately?
I think Obama is clearly the better decision maker in terms of policy. The past eight years have shown that the Republicans tend to make very bad policy decisions, and lots of them. As to whether he's the better decision maker in terms of the politics of moving legislation through the Congress, it may be too early to say, but Monday's Gallup Poll shows that most Americans think he is. Despite its flaws, the jobs bill is encouraging in that Obama got almost everything he asked for, in the most expensive single piece of legislation in U.S. history, in his first month in office. And as I wrote yesterday, this is a Markov Chain system, where success can build upon success.
It's the second question, whether the economy will give Obama enough time, that concerns Paul Krugman, and me as well. I'm not an economist, but I'm not sure even the best economists are willing to give a hard number as to how many weeks Obama has to get how much done to stave off an irrecoverable economic collapse. That is also a Markov Chain system - Obama and others called it a downward spiral - where each new months' job losses and contracted demand makes the next more likely to be worse. The deeper we sink, the more difficult it is to stabilize the system. And in terms of real human beings, the vastly more painful that process becomes.
It's "small ball" ... so far.
So far, Obama seems to have chosen a "small ball" strategy. I'm not among those who believes Obama lacks courage. I don't think his life history supports that accusation. He's also renowned and indeed has been criticized for his self-confidence, so I think Obama believes he can make better decisions - on both policy and politics - than the Republicans. Taken together, that suggests Obama believes the economy will give him at least a few weeks to play "small ball," if only to build momentum before a truly "big and bold" proposal on the other legs of his recovery stool: banking, housing, and/or health care.
The stimulus bill was not enough, not on its own. If that's because Obama is playing "small ball," I hope his sense of timing is better than the doomsayers'. Because even the best poker player can make the best choice on the information available and still be wrong ... or make the right choice and be undone by the turn of the cards. Obama is reported to be a good poker player, and if that's true he knows not to rely on getting lucky.
But he still has to avoid getting unlucky ... or we all lose.