18 7 / 2010
Maximin & Poker
One of the eggberts, working on the 40’s Manhattan project by the name of Von Neumann came up one the most useful game theory… Maximin. It’s a strategy where you maximize your minimum payout.
Chris Ferguson, a pro poker player applies the theory and has literally won millions. Here’s an great article from the New Yorker about his story. Ferguson’s dad happens to be a game theory professor at UCLA. Here is a link to his UCLA page with all the .pdf papers on the game theory applied to poker. Just to warn you though… all the math formulas can make you go dizzy. But interesting to skim through if you want to become a nerd-core poker player.
Maximin is also very useful in doing pricing strategies or in negotiations (departmental budgets, divorce, lawsuit settlements, salary/benefits, equity stakes, etc.), where you dealing with multiple parties and you have to assume a pessimistic view of everybody is out to screw you. If you can maximize your minimum payout, you know you did the best you could when you don’t have leverage. And if the other negotiating parties do not end up screwing you… then you gained more than you originally had pessimistically planned. Basically, you plan for the worst and hope for the best.
