ICM
Independent Chip Model — the real value of tournament chips
Definition
ICM (Independent Chip Model) is a mathematical model that converts tournament chips into real money value, based on the prize pool, the paid places and each player's current stack. It's a fundamental concept for understanding tournament decisions. Under ICM, chips don't have linear value. Doubling your chips doesn't double your real equity because the value curve is concave: each additional chip is worth less than the previous one. Chips lost are worth more than chips won. That's why near the bubble or late in a tournament, hands that are profitable in chip-EV become -EV in $EV. ICM justifies very tight folds in bubble or final-table situations, even with good hands. Understanding ICM is essential for MTTs, Spin & Gos (with their variable prize pool), and SNGs.
Bubble of a tournament paying 3 out of 4 players. You have 20bb. Calling an all-in with AA can be -$EV under ICM if several short stacks are likely to bust before you, guaranteeing you the paid spot by folding.
Frequently asked questions
Why are chips worth less as you win them?
Because tournament chip value is concave (the ICM model): the prize pool is finite and paid places cap the payout. Doubling your stack therefore doesn't double its real cash value — hence folds tighter than chip-EV alone would suggest.
When does ICM matter most?
Near the bubble and at pay jumps (final table), where busting or surviving changes cash value a lot. Hands that are profitable in chips can turn -EV in real money there.