Two-Minute Takeaways: Thinking in Bets by Annie Duke

Some FISD members recently read Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts by Annie Duke. Duke is a professional poker player who succeeds because she makes rational, coolheaded decisions at the card table. Below is a summary of some of the book’s most important takeaways for FISD members, according to FISD Reads group leader Hope “Hope-rah” Wilkes.

Change my mind: Pete Carroll’s decision to pass in the final moments of the 2015 Super Bowl was a good decision. Football fans know that the Patriots intercepted the pass and clinched the title. That doesn’t mean the Seahawks coach made a bad call based on the history of what happens in that same situation: the vast majority of the time, team either scores or lives to fight another day after an incomplete pass. Moral of the story: a sound, well-reasoned decision might turn out badly due to rotten luck.

Be lucky and good. Rigorously interrogate your wins. As noted above, correlation does not equal causation. Look deeper. Just as a bad outcome doesn’t necessarily mean a decision was bad, a good outcome doesn’t necessarily mean a decision was good. When something works, make sure you understand why.

Don’t freak out, but the world is chaotic and governed by randomness. Get comfortable with the fact that luck is an uncontrollable factor in the outcome of your decisions. Because of this, a decision’s outcome is not always a great indicator of the decision’s quality.

Chess is nothing like real life. In chess, all possible moves are visible to you, provided you’re able to visualize and anticipate them. In real life, cascading effects of your choices are initially hidden from you and luck can change everything. Well-reasoned decisions are of course ideal, but don’t be paralyzed by a desire to optimize – it’s simply not possible in all cases in the real world as it is with chess.

Saying “I don’t know” isn’t a moral failing. Acknowledging and understanding the uncertainty inherent in a given decision is far better than feigning certainty.

Avoid belief traps. For a variety of reasons, people have a hard time changing our beliefs when we learn new information. Worse, because it’s much easier to believe information than to vet it, we only occasionally vet information, if we have the time and are in the right mood to do it. Instead of instinctively believing information, work on instinctively trying to verify it.

Rethink “I’m confident.” In our vernacular, this is often treated as a binary, you’re either confident in the correctness of your answer or you’re not confident. For decision making purposes, we’d be better served by expressing confidence along a spectrum: “I’m 75% confident” paints a more useful picture than “I’m confident.”

Retrain your brain. It’s normal to get a charge out of being right. To keep yourself on track for making optimal decisions, it helps to retrain yourself to get the same feeling of satisfaction from rigorously interrogating your decisions and how they relate to eventual outcomes. Change your routine from celebrating the outcome to studying how you could’ve optimized your decision and make the act of examining the decision the thing that makes you feel like a winner.

Then retrain your colleagues’ brains. Duke suggests that redefining success at your company as “providing the most accurate, objective, and detailed evaluation of what’s going on [will encourage] employees…[to] compete to win on those terms.”

Diversity matters. Including people with opposing views in your decision-assessing group improves the accuracy and quality of your decisions and helps limit the tendency to take ideologies to the extreme.

Hindsight isn’t always 20/20. People tend to think more rationally about the future than the past. Duke points out, “it’s harder to get defensive about something that hasn’t happened yet.”

Bibliography: Duke, Annie. Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts. Portfolio/Penguin, 2019. Duke, Annie. Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts. Portfolio/Penguin, 2019.

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