Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts
Annie Duke graduated university with plans to become a psychologist, but after her brother invited her for a poker night, she fell in love with the game and went on to become a World Series of Poker champion.
She draws on examples from business, sports, politics, and (of course) poker to share tools anyone can use to embrace uncertainty and make better decisions. Annie makes the point that our life is not like chess — we don’t have all of the pieces in front of us. She goes on to explain:
“Poker, in contrast, is a game of incomplete information. It is a game of decision-making under conditions of uncertainty over time. (Not coincidentally, that is close to the definition of game theory.) Valuable information remains hidden. There is also an element of luck in any outcome. You could make the best possible decision at every point and still lose the hand, because you don’t know what new cards will be dealt and revealed. Once the game is finished and you try to learn from the results, separating the quality of your decisions from the influence of luck is difficult.”
We don’t have all of the cards lying face-up in front of us. You don’t know exactly who you will meet in the next 5 years and who will open what doors for you. You don’t know what lessons you’ll learn along the way. You don’t know if you’ll break both your legs and what friends will die, or how that will affect your thinking about certain issues. You don’t know how you will view your life-goals 5 years from now.
Some of these are in your control; mostly they are not. Indeed, life is a lot more like poker. The information is often asymmetrical, meaning that we don’t know what other people know or what moves they will make.
“Even the best decision doesn’t yield the best outcome every time. There’s always an element of luck that you can’t control, and there is always information that is hidden from view. So the key to long-term success (and avoiding worrying yourself to death) is to think in bets: How sure am I? What are the possible ways things could turn out? What decision has the highest odds of success? Did I land in the unlucky 10% on the strategy that works 90% of the time? Or is my success attributable to dumb luck rather than great decision making?”
More quotes and big ideas from the book:
- Decisions are bets on the future, and they aren’t “right” or “wrong” based on whether they turn out well on any particular iteration.
- It turns out, though, that we actually form abstract beliefs this way: We hear something; We believe it to be true; Only sometimes, later, if we have the time or the inclination, we think about it and vet it, determining whether it is, in fact, true or false.
- Living in the matrix is comfortable. So is the natural way we process information to protect our self-image in the moment. By choosing to exit the matrix, we are asserting that striving for a more objective representation of the world, even if it is uncomfortable at times, will make us happier and more successful in the long run.
- A lot of people were surprised to learn that the expert opinion expressed as a bet was more accurate than expert opinion expressed through peer review, since peer review is considered a rock-solid foundation of the scientific method. Of course, this result shouldn’t be surprising to readers of this book. We know that scientists are dedicated to truthseeking and take peer review seriously
- If someone is off-loading emotion to us, we can ask them if they are just looking to vent or if they are looking for advice. If they aren’t looking for advice, that’s fine. The rules of engagement have been made clear. Sometimes, people just want to vent. I certainly do.
I loved this book and go to back to it frequently when faced with tough decisions, or when I’m looking for new ways to problem solve.
Download a full list of my Kindle Notes here: Thinking in Bets.
You can purchase the book on Amazon here.