Independent Chip Model Part 1 – Understanding The ICM Model

This is part 1 of a 3 part series detailing the specifics of the ICM model. The 1st part of this series is a brief introduction to the ICM model so you get grasp a little better what it is and how it can be used.

The Independent Chip Model is a mathematical model which attempts to assign a dollar value to every tournament chip. While this is possible to do in a cash game, in a tournament your chip stack has a different value which is dependent on several factors. In the beginning of a tournament every player has an equal chance of finishing in 1st place therefore every chip in play has an equal value, however as the tournament progresses and chip stacks increase and diminish the value of every chip changes as well. If you had a starting stack of 1,500 chips and now you lost 20% on a busted straight draw your remaining 1,200 chips hold less value because now your odds of winning have diminished. Determining the exact percentage however can only be achieved using a mathematical model based on your chips and the total chips in play and this is where the Independent Chip Model (ICM) comes in to play.

The basic assumption of the ICM model is quite simple; every player has a chance of winning the tournament based on the relation of their chip stack to the number of chips in play. For example if you have 45% of the chips in play, on average, you will win the tournament 45% of the time. Keep in mind however that the model does not take into account any other variables such as your opponents’ skills, the cards dealt, nor the blinds. As such it’s important to note that the method is far from perfect and it requires you to analyze your opponents’ styles in order to establish a range of possible hands they would push all-in with or the hands they would call your all-in.

The ICM model can also determine your odds of finishing in any other position in the tournament. To calculate your odds of finishing in 2nd place you must first assume the chip leader will finish in 1st place and thus his chips must not be accounted for in the total chips in play. So now assuming there were 20,000 chips and the chip leader had 9,000 there are now 11,000 to account for. If you have 5,500 you have a 50% chance of finishing in 2nd place. The odds of finishing in any subsequent position are calculated in the same manner.

So far this information may not seem useful to you aside from determining your chances of finishing in the money but you will see that the percentage calculated will determine your equity. This equity represents a dollar value amount of how much you are expected to win based on the total prize pool. Once you have calculated this amount only then can you assign a true dollar value to every chip. So how does knowing the dollar value of your chips help you in making a push or fold decision? By determining how much extra equity you will gain if you move all-in and win versus if you lose. In the second part of this series we will examine more in detail the calculations behind the ICM model and we’ll illustrate with some examples to make it easier to understand.