The 80-20 Rule

When it comes to poker, sports betting or any other game of chance your profits are almost never determined by your skills alone, but also by your opponents’ skills.

I was merely in the upper middle class of poker players and needed to be in a game with some bad ones to be a favourite to make money. Fortunately, there were plenty of these bad players – what poker players call fish – during the poker boom years.

There is a learning curve that applies to poker and to most other tasks that involve some type of prediction. The key thing about a learning curve is that it really is a curve: the progress we make at performing the task is not linear. Instead, it usually looks something like the figure below – what I call the Pareto Principle of Prediction.