Written by :
Published on :
On her Huffington Post blog Monday evening, poker pro Annie Duke talked of green unicorns in making a point about good decision making and drawing parallels to the recent financial crisis.
“I can say a lot of things about green unicorns that might sound perfectly reasonable. Like green unicorns don't fare well in captivity because they are generally skittish and don't like to be around humans (this is why they are rarely spotted in the wild and you probably have never seen one). Green unicorns are green because their habitat is woodlands so the green color of their coat acts as camouflage. You can't ride a green unicorn because they are impossible to tame. To someone who is naïve about the existence unicorns, all of these statements might sound really reasonable. But the problem is that green unicorns don't exist.”
While Annie Duke’s brother, the one time face of now defunct Full Tilt Poker, Howard Lederer, probably wishes he owned a little green leprechaun right about now, they, too, do not exist….unless you happen to be Irish. Considering Lederer is accused by the US Government of perpetrating an elaborate ponzi scheme, one has to wonder if Ms. Duke didn’t have him in mind when she wrote this.
Duke’s point is that you can do everything perfectly, but if you are not thinking rationally, bad decision making is sure to follow.
The poker pro and former “Celebrity Apprentice” runner up draws comparisons to the recent financial crisis.
“If you look at the financial sector, you can see the problem at work. The banking industry made an assumption somewhere along the way that housing prices would have a constant upward trend. Once that assumption was in place, the behavior of the mortgage industry and the investment bankers looks completely rational. If prices will continue to go up, then lending money at 0 percent down is a rational choice because while a home buyer might not start off with any equity in their property, they will build equity as time goes on. An ARM becomes a rational choice because even though interest rates might go up on the loan within three to seven years, that is okay because the buyer's house will always be worth more than when they bought it so they can always sell or refinance to solve for the interest rate problem.
But the assumption wasn't true. And when housing prices tanked the house of cards came tumbling down as the whole basis of the decision chain was ripped out from under us.
We all operate on assumptions. We assume the sun will come up every day. We assume we aren't getting fired tomorrow. We assume that the FDA is protecting us. All of our decisions are based on assumptions. So challenge your assumptions because so often they are just wrong.”
- Nagesh Rath, Gambling911.com
