Bad luck was not the reason for your last poker defeat… it was because you’re not good enough, according to a Manchester academic.
Dr Tobias Galla, a University of Manchester physicist, claims some games are impossible for people to learn or too complex for human minds to understand.
Along with Professor Doyne Farmer from Oxford University and the Santa Fe Institute, Dr Galla ran thousands of tests to gauge the connection between human behaviour and tactics.
He discovered people can quickly calculate optimal strategy in simple games such as noughts and crosses but that they lose rationality when faced with multiple options, like in poker and chess.
This leads to chaotic and, at times, random decision-making stemming from confusion as much as anything else.
Dr Galla argues the research explains behaviour of the financial markets, as economists make predictions based on equilibrium theory.
This assumes traders are totally intelligent and rational, however, which the academics think explains why many predictions prove wildly inaccurate.
“Equilibrium is not always the right thing you should look for in a game,” said Dr Galla.
“In many situations, people do not play equilibrium strategies, instead what they do can look like random or chaotic for a variety of reasons, so it is not always appropriate to base predictions on the equilibrium model.
“It could be that we need to drop these conventional game theories and instead use new approaches to predict how people might behave.”
Preliminary results suggest the chances of reaching equilibrium decreases as the number of players increases, which again suggests the theory has little relevance in explaining market predictions.