Liar's Poker

Definition of 'Liar's Poker'


A game often associated with Wall Street traders who use statistical reasoning and behavioral psychology tactics to gamble. Liar's Poker is fairly similar to the card game "cheat." Players hold random dollar bills with close attention to their own bill serial number. The objective of the game is to bluff the opponents into believing that your bid does not exceed the combined sum of all of the serial numbers.

Liar's Poker is also book by Michael Lewis that depicts the Wall Street bond trading culture at Salomon Brother's.

Investopedia explains 'Liar's Poker'


In Liar's Poker, if one player bids three 4s, he predicts that within all of the dollar serial numbers held by all players, there are at least three 4s. If the player's bluff is not called, the next player must either bid a higher frequency of any other digit (five 2s) or can bid a higher number at the same frequency level (three 6s).



comments powered by Disqus
Hot Definitions
  1. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will be executed at a specified price (or better) after a given stop price has been reached. Once the stop price is reached, the stop-limit order becomes a limit order to buy (or sell) at the limit price or better.
  2. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The principle states that, for many phenomena, 20% of invested input is responsible for 80% of the results obtained. Put another way, 80% of consequences stem from 20% of the causes.
  3. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The principle states that, for many phenomena, 20% of invested input is responsible for 80% of the results obtained. Put another way, 80% of consequences stem from 20% of the causes.
  4. Budget Deficit

    A status of financial health in which expenditures exceed revenue. The term "budget deficit" is most commonly used to refer to government spending rather than business or individual spending. When referring to accrued federal government deficits, the term "national debt” is used.
  5. Floating Exchange Rate

    A country's exchange rate regime where its currency is set by the foreign-exchange market through supply and demand for that particular currency relative to other currencies. Thus, floating exchange rates change freely and are determined by trading in the forex market.
  6. Underwriting

    1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies.
Trading Center