Utility refers to the quality or state of usefulness or being useful. Expected utility is the mathematical description of preferences of people when betting as regards to any uncertain events like the game of poker and it accounts for the size of the payout, the probability of the occurrence, aversion to risk and different types of utility of the same type of payout to people with different preferences. In layman’s language, it means that as the required use of money changes, expectations or the outcomes of the game will also change.
People playing poker either want to win, or to have fun, or maybe both. The thing is that not all poker players play uniformly, because the amount of money they have is perceived differently. For example, some people can make a bet of 100$ easily, because this sum is not so big for them, but for others 100$ it is a huge amount, so they will think twice before making that bet. In this circumstances it is easier to see that people who are risk-takers don’t think and usually act in the same way- this is the concept of expected utility. This theory says that the decisions taken by a poker player are influenced by the way he perceive the size of the pot.
Using the expected utility, you can make reasonable decisions instead of relying on luck. Psychological type of your opponents will affect their style of play. Most people are pretty scared, when they move to higher limits, because the more money they bet, the more money they can possibly lose. This helps to understand why it is reasonable not to play at limits that you aren’t ready for. In case if you still feel risk-averse, then you can play at this level at ease, but if you feel scared to lose your money – get back to the limit you’ve been playing before. Fear of losing money is probably one of the greatest impediments on your way to success, because your fear wouldn’t let you concentrate on the game and force you to make stupid decisions like folding, when you have good chances to hit the pot.
Utility of tournament chips
Expected utility theory explains also why tournament games are different from ring games. At tournaments players are more risk-averse comparing to ring games, because of the expected utility. For example if in the early stage of the tournament you have 1000 chips it is not a good idea to put all-in on a 50-50. This because if you win 1000 chips doesn’t mean so much for you, but if you lose the amount of chips , then you are out of the tournament. In the mid stage of the tournament, the same move, would be a good one and this because having a bug stack this will give you the opportunity of some extra utility by stealing some blinds. And also if you are under a short stack later in the tournament you would be very happy with that 50-50 all-in.
