Still Thinking about The E.V. of an $8 Cab Ride

(or) Exercising Your Decision-Making Muscles Empowers Every Element of Your Life

Life is about decisions, and poker is a great training ground for honing your decision-making skills. Every day we have to make decisions and the more we develop that skill, the better our lives become.

The Wednesday before Thanksgiving, was a good example. My flight to visit my family in Charlotte was scheduled to leave BWI at 3:35 p.m. I planned on taking a 1:20 Marc train from D.C.’s Union Station that would get me to BWI at 1:58. By the time I picked up the free shuttle, I figured I would be at the terminal by 2:15. While it was a little tight, it seemed like a good plan.

While waiting for the 1:20 train, there was an announcement that it was running late. My first instinct was to check my options. There are always options. As it was, the next Amtrak train wasn’t until 2:05. Taking a cab would have been at least $75 plus there was no guarantee that it would get there any faster.

As it was, I boarded the train at 1:40 and arrived at BWI at 2:18. I don’t hope; I plan. So before we arrived, I got up from my seat and moved towards the doors because I wanted to get on the first shuttle. When I arrived, the shuttle wasn’t there. Sure enough, there were cabbies hustling: “No waiting; we’ll take you now. Only eight dollars.”

Eight bucks for a cab or wait for the free shuttle? I now had an opportunity to flex my decision-making muscles. And because I’ve been playing poker since I was sixteen, I’ve developed the skills to quickly measure risk and reward and make an empowered decision.

I love this example because there are so many variables to consider. First off, what if I miss my flight? Given that it’s the busiest travel day of the year; will I be able to get on another flight that day? And even if I can, how much will it cost? How much of a hassle will it be for my brother who is picking me up in Charlotte? Where will I sleep if I have to stay over-night?

Let me take you inside my head. First of all, if I didn’t have eight dollars I would have had fewer options. Or even if I had it but was feeling strapped, that money would have been hard to part with. When you enter any game, business, or life situation short of capital, it creates fewer options and more stress which often leads to sub-optimal decisions.

I emphasize in my book, The Poker MBA, and in my speeches that decisions need to be made based on future, and only future E.V. (expected value). On this particular trip, I had saved more than $100 by not renting a car for my time in D.C., I crashed with friends, and this was all on the heels of being well paid for a speech, not to mention that my cross-country flight was paid for. Add the fact that I had paid $6 for the Marc commuter train instead of $14 for the Amtrak so the $8 felt insignificant. See, it felt insignificant based on the immediate past. Gamblers would say I was free-rolling because I had already saved money for the cheaper train. But I believe there’s no such thing as found money or playing with the house’s money. Once it’s in your pocket, regardless of how it came to you, it’s yours.

On the other hand, what if I had over-paid for a bad dinner the night before and then lost two grand playing poker? What if I had splurged and paid $34 to ride the Acela to sit in a more comfortable chair? I likely would have felt less inclined to pay for a cab when the bus was free. That’s human nature, but it’s also not sound decision-making. Since I had $8 in my pocket, the decision should have been limited to the future E.V. of taking the cab. It’s hard not to think about the immediate past, but it doesn’t mean it’s smart. Whatever I had spent in the past was a sunk cost.

Eight bucks for a cab made the decision easy. But what if it was $80? What if it was the only flight of the day and if I didn’t catch it I would miss a speech or a wedding? In those situations, I might have paid $800. What makes decision-making so dynamic is that we’re dealing with imperfect information. I couldn’t know for sure if the bus (or the cab for that matter) would get me there on time.

I took the cab. I arrived at the terminal at 2:28 and there was no line at ticketing. I was a bit disappointed. Then I went to security and when there was no line, I was really disappointed. See, I wanted to feel good about my decision! I had factored in that there could be a long line for security. As it was, I was at my gate more than an hour before take-off.

So did I make a poor decision? Given the outcome, it appears I did. I wasted $8 on a cab when the free bus would have gotten me there in plenty of time. And while I think there’s tremendous value in analyzing decisions, you can only evaluate them based on the information you had at the time. If I had to make this decision again, knowing what I knew not now, but at that time, I would have made the same decision to take a cab. It was a very small price to pay for insurance and the risk of losing $8 (as I did) was far less than the risk of missing my flight.  What I would have done differently is that I would have taken an earlier train and printed my boarding pass. Even though the outcome was okay, I recognize those were poor decisions and I’ll be smarter next time. I don’t want to miss any opportunities to learn even when the outcome was desirable.

Whether it’s catching a cab, going through a yellow light, or pre-paying for a gym membership, these are the type of life decisions we make every day. They all involve risk and return and require critical thinking. By honing the skills of a poker player, you become better at them.

The key learning points from this story are:

  • Have enough money and play at stakes you can afford. When you’re short on money, not only do you have fewer choices, but the worry and stress leads to an emotional state (known as tilt) that clouds your decisions.
  • Remember that there are always options. When choices A and B look bleak, think about choices C and D.
  • Hope is a waste of energy. Don’t hope. Instead, plan, evaluate and strategize.
  • Think about what you have to gain and what you have to lose from each choice. In other words, think risk and return.
  • Evaluate your decisions based on your thought process, not on the outcomes.

It may seem like a lot of work for a simple $8 decision, but once you begin to exercise your decision-making muscles, it becomes second nature and incredibly empowering. Plus, the pay-off extends to every element of your life.

I’m most thankful today that life has dealt me a wonderful hand with so many choices to make—even if a small part of me wishes I still had that eight bucks.

4 Responses to Still Thinking about The E.V. of an $8 Cab Ride

  1. art says:

    What if the cab had been $9?

    • thepokeryogi says:

      IT DEPENDS…which is the answer to just about every question. You’re right that because it was $8, the decision was almost too easy. Twenty or more and I probably would have taken my chances with the free shuttle.

  2. Vegas Tony says:

    Another excellent post, wrapping the concepts of sunk cost and results-based confirmation bias into one easily digested story. With all that said, just spend the $8 you cheap bastard. The EV considerations are outweighed by the marginal utility: a fancy man like you should not spend an hour of his life grappling with an $8 decision. Your time is worth more than that. Being able to quiet your mind for that hour would’ve been more valuable.

    • thepokeryogi says:

      Well said, Tony. But what you’re missing is that I didn’t spend an hour on this decision. All that went through my mind in 6.2 seconds…roughly the same time it took me to cover forty yards on Schoelkopp Field and still pitch a no hitter.

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