# Liar's Poker Explained: Rules, Strategies, and Wall Street Connection

## What Is Liar's Poker?

"Liar's Poker," a game favored by Wall Street traders, combines strategy, psychology, and luck. Players bet on the frequency of digits in currency serial numbers, making this game both exhilarating and challenging. It's also the title of Michael Lewis's bestselling book, which delves into the high-stakes world of bond trading at Salomon Brothers in the 1980s.

### Key Takeaways

*   Liar's Poker is a strategic betting game that involves predicting the frequency of digits in the serial numbers of dollar bills held by players.
*   The game requires skillful bluffing and psychological tactics to convince opponents of the validity of one's bid.
*   Comparatively, Liar's Poker shares similarities with Liar's Dice in terms of bidding and bluffing dynamics.
*   Michael Lewis's book "Liar's Poker" provides an insightful depiction of Wall Street's bond trading culture in the 1980s.
*   The game and the book both highlight the themes of deception and high-stakes betting prevalent in financial environments.

## How Liar's Poker Works

  
Liar's poker, like the game poker itself, relies on a mix of statistical reasoning, chance, and psychological tactics. The rules are fairly similar to those of the card game "Cheat." Players hold randomly drawn dollar bills, with close attention to the _serial numbers_ on their respective bills.

The objective of the game is to bluff opponents into believing that your bid does not exceed the combined sum of all of the serial numbers among the bills in play.

In Liar's Poker, if you propose three "fours," you predict there are at least three "fours" among all serial numbers being held. If not challenged, the next player must bid a higher frequency of any digit or a higher number at the same frequency.

The game continues until somebody thinks the prior player is lying and calls the bluff. If correct, the one who called the bluff wins; if not, the player who proposed the sequence wins.

![Dollar Bill Serial Number](https://www.investopedia.com/thmb/rvXOGIkixJSqKSJxV9eTeUVDM8A=/643x0/filters:no_upscale():max_bytes(150000):strip_icc()/Clipboard01-d20f6eb9351e4f36a46e11fd87b53b2d.jpg)

*Dollar Bill Serial Number.*

## Winning Strategies for Liar's Poker

The number of players in the game can affect the probability of winning, though the game itself largely rewards and benefits those who employ deception and trickery to win. Rather than merely bidding as accurately as possible, the players are taking turns at coaxing their rivals to make a mistake as they play.

The rules of the game require bids to continue escalating, thereby increasing the game's stakes. With more than two players, it is a frequent strategy to continue raising the bid, given the likelihood of being challenged and the related risk of losing when challenging. The strategy relies on continuous bluffing in hopes of potentially winning.

> **Tip**
>
> If you or someone you know has a gambling problem, call the National Problem Gambling Helpline at 1-800-522-4700, or visit NCPGambling.org/Chat to chat with a helpline specialist.

The game is comparable to "Liar's Dice," a game where players roll dice, hide the numbers they have rolled, and then make bids on the total number of dice they believe were rolled by all players with that face value. Here again, each player bids and bluffs until challenged by another player.

If a player challenges and is wrong, they must pay the player they challenged. If the challenged player is wrong, they pay everyone who challenged them. Usually, the [payout](https://www.investopedia.com/terms/p/payout.asp) is one dollar (the dollar used in the game), but that may be increased depending on the agreed-upon rules and stakes.

## Exploring Michael Lewis's "Liar's Poker" Book

"Liar's Poker" is also the title of a popular financial book by Michael Lewis, which depicts the Wall Street bond trading culture at Salomon Brothers (later known as Salomon Smith Barney). It was first published in 1989.

The book offers an inside view of a chaotic time in U.S. business history. Alongside "[Barbarians at the Gate: The Fall of RJR Nabisco](https://www.investopedia.com/stock-analysis/020915/most-famous-leveraged-buyouts-kkr-cg-bx-vno-apo.aspx)" and "[The Bonfire of the Vanities](https://www.investopedia.com/articles/investing/082515/how-do-asset-bubbles-cause-recessions.asp)", "Liar's Poker" captures 1980s Wall Street culture.

Lewis, who previously worked as a bond trader, has said that he intended the book to be a cautionary tale about questionable and deceptive behavior and practices at his workplace. But he admits that some individuals have since used the book as a blueprint to seek personal profit.

> **Fast Fact**
>
> Michael Lewis is best known for his acclaimed books "The Big Short" (2015), "Moneyball" (2011), and "The Blind Side" (2009), all adapted into major films.

## Is Liar's Poker (Book) a True Story?

"Liar's Poker" is a non-fiction, semi-autobiographical book by Michael Lewis, recounting his own experiences on Wall Street in the late 1980s.

## Does Salomon Brothers Still Exist?

In 1997, Salomon Brothers merged with Smith Barney and formed Salomon Smith Barney. Citigroup then merged with the bank, turning Salomon Smith Barney into its investment banking arm. In 2003, Citigroup dropped all references to the Salomon name due to its association with financial scandals.

## What Are the Lowest and Highest Ranked Numbers in Liar's Poker?

In Liar's Poker, 0s are usually the lowest-ranked numbers, while 9s are the highest-ranked numbers.

## The Bottom Line

Liar's Poker is a strategic betting game where players bet on the frequency of digits in the serial numbers of dollar bills. This game, requiring a blend of statistical reasoning, psychology, and bluffing, is popular among Wall Street traders and is depicted in Michael Lewis's book "Liar's Poker". The book, offering an inside look at the 1980s bond trading culture at Salomon Brothers, highlights the game's blend of skill and deception in decision-making. By understanding the interplay of strategy and rivalry, players can effectively engage in Liar's Poker and appreciate its cultural and financial significance as highlighted in Lewis's narrative.  

> **Article Sources**
>
> 1.  American Psychiatric Association. "[What Is Gambling Disorder?](https://www.psychiatry.org/patients-families/gambling-disorder/what-is-gambling-disorder)"
>     
> 2.  National Council on Problem Gambling. "[Help & Treatment: National Problem Gambling Helpline](https://www.ncpgambling.org/chat/)."
>     
> 3.  New York Public Library. "[Liar's Poker](https://nypl.overdrive.com/media/C3CF7F42-3260-4EB7-A9FF-2026BF9CB507)."
>     
> 4.  New York Business Journal. "[Before 'The Big Short': Michael Lewis' First Take On Wall Street's Fall](https://www.bizjournals.com/newyork/news/2015/12/11/michael-lewis-big-short-conde-nast-portfolio.html)."
>     
> 5.  Michael Lewis. "[About the Author](https://www.michaellewiswrites.com/#top)."