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Playing It Smart: Is experience the best teacher in the casino?24 November 2008
By Alan Krigman
Conventional wisdom says "experience is the best teacher." The philosopher, Georgio Santayana, was more scholarly: "those who cannot learn from history are doomed to repeat it." Albert Einstein had yet another take, defining insanity as "doing the same thing over and over again and expecting different results."
Are conventional wisdom, Santayana, and Einstein right? If so, why do few solid citizens avoid the pitfalls they should have learned from casino visits that turned out badly, and repeat situations where they did well? Or is there something that makes casinos different from the rest of the known universe?
These maxims hold reliably where cause-and-effect rules. Where one action leads to a certain consequent result. But real scenarios don't necessarily work this way. Daily life is full of situations not normally associated with risk, that hinge on chance. You can't be sure of leaving work early today without getting called on the carpet, just because you've been doing it for weeks. Worse, even if you recognize the uncertainty, there may be no way to precisely determine the related probabilities. You may not even know the factors involved. The boss's baby was sick. A call from an important client. A snitch down the hall.
Casinos carry this to the extreme. They're not only built on probability, but the likelihood of critical events can be precisely enumerated. Say you play craps once a month. You bet once, on Pass, each time. The chance of winning is 48.29 percent.
In January, you bring $100, bet it all on Pass, and lose. In February, you double-up, betting $200 on Pass and lose again. In March, it's $400, and so on. Maybe you lose five months running. Does experience warn you this is not a good idea? Or, returning for a sixth try dooms you to repeat the first five? Or you'd be nuts to make the bet again and expect to win? Or does it tell you Pass bets win frequently so keep trying?
Carry this further. Pretend you lose six in a row and win in July. You were $6,300 in the hole, bet $6,400, recouped your past losses, and showed a $100 profit. Is the lesson you learned from the experience that if you keep going, you'll eventually succeed?
There's more. Looking backwards, it's natural to envision events following from one another because you know what happened at one step as a consequence of the last. This was a particular case but it can create a false perception of cause-and-effect. You cleaned your hands with a scented tissue, picked up and "set" the dice, tossed in a certain way, and won coming-out with 11. Can you repeat the steps for the same result? This is an inverse-Einstein. Thinking so would be nits; it ignores the uncertainties moving forward in time when you can't predict the future.
Here's a final caution about learning from history in situations involving uncertainty. Conclusions are often biased. Sometimes purposely. One group cites horror stories of folks ruined by getting behind and digging deeper trying to recover. Another tells of people who drew down their savings to keep going, and caught a break. Sometimes the biases are inadvertent. You hear about the person who parlayed a $20 bill found on the sidewalk into $100,000. Nobody mentions the many who started with $20, lost, and went away. What to do: ignore history, follow it, or view both through the filter of uncertainty and the impact of the unexpected? The poet, Sumner A Ingmark, answered this way:
What happened before may happen again,