Skill versus luck

I was debating someone over whether poker was a game of skill or luck. The same question is asked of many games or sports.

The best test for whether it's a game of skill or luck is one I heard of from Michael Mauboussin: if you can lose on purpose, it's a game of skill.

So poker, blackjack, Monopoly, Settlers of Catan...all games of skill. There is luck involved, of course, but skill plays a critical role. The lottery, roulette, slot of luck.

I first heard of Mauboussin when I was at Amazon as he owned a stake at Legg Mason. I saw a presentation, maybe he gave it in person, it's hard to remember now, and he described why he was bullish. Being an insider at a company, you can quickly tell which outsiders are smart and which aren't purely by how much they can deduce about your business that you haven't shared with them explicitly. People like Bill Gurley and Mauboussin were clearly a cut above.

Mauboussin's new book The Success Equation was just released. I haven't had more than a few minutes to skim the introduction, but it looks to be an informative read, with what I suspect will be some advice that overlaps with what I've been getting from Nate Silver's The Signal and the Noise, which I'm about a quarter of the way through. That is, we often overrate the predictive power of a single example because it comes with an appealing narrative or because we force fit it to support the narrative we want to see.