Friday, May 27, 2011

Luck or Skill?

I have been re-reading Michael Mauboussin's "Untangling skill and Luck" (pdf) over the past week.

One of my favorite parts is where he discusses the relative composition of luck and skill in a particular activity.
There’s a simple and elegant test of whether there is skill in an activity: ask whether you can lose on purpose. If you can’t lose on purpose, or if it’s really hard, luck likely dominates that activity. If it’s easy to lose on purpose, skill is more important.
The quote is attributed to Annie Duke's 2007 testimony on behalf of Poker Player's alliance. Although, I did not find the exact source, the testimony is itself a fascinating read. At one point she tries to distance poker from other forms of gambling:
There is critical distinction between poker and other forms of “gambling” which is the skill level involved to succeed at the game. I cannot stress this point enough: in poker it is better to be skillful than lucky. I ask anyone in this hearing room to name for me the top five professional roulette players in the world or the number one lottery picker in America. It is just not possible (my apologies to one obvious candidate, Congressman Sensenbrenner). We can however have a real discussion about the top five professional poker players, just like we can have a discussion about the top five professional golfers.

No comments: