I figured I'd bump this thread and add on. I don't know that you can simply say bad live players don't bet large enough. Many don't, but bad live players seem to fall into a few different categories on bet sizing at least some of which bet too large. I'm no expert but, here are a couple of betting categories I have seen . . . interested to hear if others see these types &/or others.
(1) Absolute Dollar Value (ADV): This player judges the size of the bet almost solely on how much that $ amount means/feels to him. If $50 seems like a lot of money to them, it's a big bet regardless of whether the pot is $50 or $500. The less fishy of this group may make some adjustments to pot size but usually stay anchored near their comfort zone. If a bet falls below their threshold, they will call it if they have a hand that isn't very obv beaten. The key to playing ADV's is to determine what their threshold is. As long as you stay in their comfort zone they will pay you off holding hands like middle pair. If THEY lead with something more than your observed threshold you can be sure they have no less than the absolute nuts. They'll call over the threshold with 2nd-3rd nut but will never raise since they suspect you have top nut. Obv, don't bluff an ADV for an amount that is near their comfort zone. If they are leading don't think they don't have a hand just because they are betting small vs. pot size. They will bet/call their threshold on all three streets with hands like two pair and low sets. It can be frustrating when they show you a set (without a single raise) and will probably tell you "I thought you had a bigger set." On the plus side, you are never in danger of being stacked by one of these guys and they are fish-friendly. You will see profitable ADV's who only play real [but skewed] value and love to bluff catch. They just want to grind out a steady low variance profit courtesy of the drunks and calling stations. They are great to play with since they never stack the fish (leaving $$$ for you) and can be really helpful in building big pots when you want them.
(2) OverBet Maniac (OBM): Sometimes it's just too fun to say "all-in." OBM's love the thrill of making someone fold and will hammer the pot whenever they have something they want to play. Their goal doesn't appear to be profit but instead domination of the enemy. If you flat them, they'll come back on the next street with a larger bet and will happily put themselves all-in with top pair or even AK that didn't connect. They will also make huge bets with overpairs and can never seem to lay them down. Yeah, sometimes they will show up with a monster . . . it's just a crap shoot. These guys will frustrate you by blowing all the calling stations out of the water before they can put their money in. They usually play tighter than the typical maniac . . . but they don't know when to lay down a good preflop hand that never connected.
(3) Crusty Old Set Miner: These old farts are really easy to spot since they practically sit down at the table with a helmet and head lamp. They almost never raise pre, will grumble and call your raise then insta fold the flop. They are kind of ADV in that they seem to have some fixed number in their heads that qualifies as a reasonable price to see a flop with any PP regardless of position. They'll play the premium hands too, but they seem to have stopped learning poker at the "sets are good" stage. The only time you get their money is pre-flop or if you happen to catch a bigger set or straight. They will never EVER lay down a set unless there's a flush on the board or maybe a really obvious straight . . . and when they do, you know you'll hear a steady stream of bitching about how lucky you are. They'll also grumble when you fold . . . "I finally got a hand and I can't get any action." So, you just raise them pre right up to their $ limit then bet any flop. If they are betting/calling post flop, they hit the set . . . it's that simple. I guess it's a pretty easy formula and maybe it is +EV against the tourists and drunks. I always picture someone running a boiler room of pensioners with nothing else to do with their time.