Calculated Risks: The Importance Of Taking Chances In Negotiations

Which is worse: A poker player who almost always folds, or a poker player who almost never folds? Players who always fold—unless they have a royal flush or something close—will virtually never suffer a costly defeat.

They get out early, often, and for the minimum amounts. However, they will bleed chips on every hand, including on many hands that they could win.

These players make decisions based on one factor: the cards in their hands. They neither exploit the information disadvantage of the other players—the fact that other players do not know whether they have a better hand or not—nor do they consider the nonverbal signals of the other players. The hand is dealt; the decision is made.

Players who never fold—unless they truly have nothing in their hand—will frequently win chips, despite having the losing hand, simply because the other players are nervous.

These players also make decisions based on one factor: the information disadvantage of the other players. The cards in their hands rarely matter, and they do not need to “read” the other players. On rare occasions, they will suffer a crushing defeat that they could have avoided.

Truthfully, it is hard to say which of the two is worse. By committing to a single strategy, both players lose money that they could otherwise keep.