The key to success as a professional poker player — or gambler in general — is to consistently make decisions that have a positive expected value over time.
Daniel “Jungleman” Cates and Lynne Ji offered up an interesting proposition to a waitress at a restaurant, which Ji shared in a Twitter video.
In doing so, they taught a basic but important concept on how to calculate expected value.
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To most avid gamblers, Cates didn’t teach the waitress anything they didn’t already know, but for those who aren’t in the poker community or are only recreational players, the lesson he taught on expected value might be helpful.
As explained in the video, Jungleman offered the service industry professional a guaranteed tip or she could chase bigger bucks on a crocodile game that essentially equated to flipping a coin.
The offer was a $200 tip if the luck went her way or a $0 tip if it didn’t. Or, as mentioned by Ji later on Twitter, she could have taken a guaranteed $20 tip instead of playing the game.
Without hesitation, the waitress decided to gamble and lost. But, as Cates would explain, she still made the right decision. Top poker pros don’t have a results oriented mindset. Instead, they’re focused on making positive expected value (+EV) plays so that they come out ahead long-term.
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In this case, the waitress could have taken a guaranteed $20 or risk getting nothing but with the potential to receive $200. She made the right choice because her expected value is $100 on the crocodile game, which is a 50/50 proposition.
If she played it out long enough for the luck to even out, in theory, she should average getting a $100 tip — $0 half the time and $200 the other half. Thus, her expected value is $100, which is five times the $20 tip she could have accepted.
Ji clarified on Twitter that they didn’t stiff the waitress. She was given a 20% tip ($20), and was presented with an opportunity to have that tip increased. It didn’t go her way, but she still made a +EV move, which would, in theory, pay off over her lifetime.
“I know you’re feeling very upset that you did not win $200,” Cates told the waitress. “In actuality, she made $100 in theory, 100 invisible dollars, that you can one day refund somewhere, maybe Chuck E. Cheese’s.”
“And that is expected value,” Ji said to conclude the video.
That said, it’s likely the waitress wishes she had just taken the guaranteed money.
*Image Lynne Ji Twitter.