Originally Posted by candyman718
10 Player SNG. Standard 5-3-2 Payout. Everyone starts w/ 1500 chips.
On the first 3 hands, 3 different pairs of players go all-in. You fold each hand. So, we now have 3 players at 3,000 and 4 players (inc. you) at 1500.
Are your chances of finishing in the money better or worse than they were at the beginning of the tourney?
Your chances of making money improve.
To get an idea as to why, let's continue your example. Assume that all the players are of equal ability. Now let's say that the other players in the SNG continue to go allin against one another until there is just one player with about 90% of the chips and you have about 10% of the chips.
Guess what? You've locked up at least 2nd place money! You started the SNG with an expectation of 1/3rd as much. So you've tripled up by just sitting on your hands while all but one of the others got knocked out.
Moreover, you may still get 1st place money! It turns out that you have a 10% equity in the difference between 1st and 2nd place money.
For example, if the buyin is $10 making 1st place $50, 2nd place $30, 3rd place i$20, then you would have locked up $30 and have a 10% equity in $50 - $30 = $20. 10% of $20 is $2, so your position in the SNG is worth $32.
You can verify this using the ICM calculator linked by pzhon. Play around with it for awhile by testing a variety of situations to get a feel for what is going on.
When you have done this, the next time you play in a SNG and some other players go allin early on, you'll know to smile, because you'll know that you are making money with zero risk.