[MLG]

Perhaps the most fundamental thing we do on this board is put opponents on ranges. When faced with a decision we try and figure out what they might have and make a decision based on how our hand fares against that range. Now, in some situations in order to make a decision we must consider what range our opponents put us on. For example on the river with a good but not great made hand we need to decide whether or not to value bet when first to act. So, the first thing we think about is what hands can our opponent have. The next thing we think about is, well which of those hands will our opponent call us with. Well, what defines what our opponent call us with is the range of hands he puts us on. This isn't really earth shattering. However, many people will say its pointless because Joe Internet doesn't understand ranges. Thats wrong. If Joe Internet calls to much its because he always thinks, hey he might be bluffing, so the range he puts you on is quite quite wide with a high bkuffing percentage. Knowingly or not, all opponents put you on a range, just as you put all your opponents on a range.

So, how do we exploit this situation. How do we make opponents who are putting us on a range make a mistake? When we bet on the river there are 4 possible outcomes (ignoring raising for the time being).

1. We have a better hand than villain and villain folds.
2. We have a better hand than villain and villain calls.
3. We have a worse hand than villain and villain folds.
4. We have a worse hand than villain and villain calls.

2 and 3 are obviously good for us, while 1 and 4 are obviously bad.

Simple. So, lets take an extreme example. A villain who will never ever ever call a reasonable (1/2 pot) bet on the river unless he has the mortal nuts. When you bet on the river he always puts you on the nuts. Likewise, if you check he will never bet anything short of the nuts. How do we deal with this situation? Seems simple, bluff a lot, but don't value bet medium strength hands right? Wrong. Every bet you make is a bluff, and they all have a very high chance of working. You should bet every hand on the river except for the 2nd nuts (because that is the only hand that cannot get a better hand to fold). Clearly Mr. Tighty McNuts is easy to exploit, thats not the point, the point is understanding why. He is easy to exploit, because the range he puts us on is so comically tight that he allows us to have a positive outcome for us (3) a rediculously high percentage of the time. Notice that it doesnt matter that the second highest outcome is (1) which is technically a bad outcome for us because we gain so much equity the times he folds. Also notice, that just because its absolutely correct to bet all of our hands doesnt mean we win every hand when we bet (we still lose the times he has the nuts).

Still, nothing ive said is earthshattering untill we begin to generalize away from the comic extreme. Why do we make money, because our range is extremely wide, while Tighty McNuts thinks its extremely tight. On the other extreme a villain who calls with any 2 hands will also be exploitable by value betting with a wider variety of hands than normal because he will call with worse hands, but never bluffing. Even though betting hands like 3rd pair will increase the instances of outcome 4 the increase in outcome 2 more than makes up for it.

The Actual Point
If an opponent can figure out your specific range when you bet, he can call with perfect frequency to maximize his positive outcomes. Tighty McNuts would be profitable if you only bet the 2nd Nuts and the Nuts. It is not his action that makes him bad, but his action in light of your range. So, if a villain think your range is tight in a spot (lets say he thinks you will never bluff) but in fact you are bluffing 5% of the time you are exploiting him even if those bluffs are never called, and you never show them because he is folding too much (or more accurately too large a % of his hands). The key is not what hands get shown down but what range of hands you will bet compared to what range of hands your opponent thinks you will bet. This gets much much much more complex as you add in more and more variables. Even this oversimplified post is pretty muddled, but its the beginnings of game theory. Use at your own peril.