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by
Annie Duke
Read between
February 7 - February 12, 2018
INTRODUCTION Why This Isn’t a Poker Book
Mistakes, emotions, losing—those things are all inevitable because we are human. The approach of thinking in bets moved me toward objectivity, accuracy, and open-mindedness. That movement compounds over time to create significant changes in our lives.
Thinking in bets starts with recognizing that there are exactly two things that determine how our lives turn out: the quality of our decisions and luck. Learning to recognize the difference between the two is what thinking in bets is all about.
1 Life Is Poker, Not Chess
I ask group members to come to our first meeting with a brief description of their best and worst decisions of the previous year. I have yet to come across someone who doesn’t identify their best and worst results rather than their best and worst decisions.
When we say, “I should have known that would happen,” or, “I should have seen it coming,” we are succumbing to hindsight bias.
When we work backward from results to figure out why those things happened, we are susceptible to a variety of cognitive traps,
The challenge is not to change the way our brains operate but to figure out how to work within the limitations of the brains we already have.
Poker, in contrast, is a game of incomplete information. It is a game of decision-making under conditions of uncertainty over time.
the world doesn’t easily reveal the objective truth.
Suppose someone says, “I flipped a coin and it landed heads four times in a row. How likely is that to occur?” It feels like that should be a pretty easy question to answer. Once we do the math on the probability of heads on four consecutive 50-50 flips, we can determine that would happen 6.25% of the time (.50 × .50 × .50 × .50). That’s making the same mistake as Vizzini. The problem is that we came to this answer without knowing anything about the coin or the person flipping it.
getting comfortable with “I’m not sure” is a vital step to being a better decision-maker.
A great decision is the result of a good process, and that process must include an attempt to accurately represent our own state of knowledge. That state of knowledge, in turn, is some variation of “I’m not sure.”
They understand that they can almost never know exactly how something will turn out. They embrace that uncertainty and, instead of focusing on being sure, they try to figure out how unsure they are, making their best guess at the chances that different outcomes will occur.
An expert in any field will have an advantage over a rookie. But neither the veteran nor the rookie can be sure what the next flip will look like. The veteran will just have a better guess.
wrapping our arms around uncertainty and giving it a big hug will help us become better decision-makers.
“I’m not sure” is simply a more accurate representation of the world.
when we accept that we can’t be sure, we are less likely to fall into the trap of ...
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Any prediction that is not 0% or 100% can’t be wrong solely because the most likely future doesn’t unfold.
An event predicted to happen 30% to 40% of the time will happen a lot.
When we think probabilistically, we are less likely to use adverse results alone as proof that we made a decision error, because we recognize the possibility that the decision might have been good but luck and/or incomplete information (and a sample size of one) intervened.
For most of our decisions, there will be a lot of space between unequivocal “right” and “wrong.”
Making better decisions stops being about wrong or right but about calibrating among all the shades of grey.
The world is structured to give us lots of opportunities to feel bad about being wrong if we want to measure ourselves by outcomes. Don’t fall for it!
2 Wanna Bet?
By treating decisions as bets, poker players explicitly recognize that they are deciding on alternative futures, each with benefits and risks. They also recognize there are no simple answers. Some things are unknown or unknowable.
Every decision commits us to some course of action that, by definition, eliminates acting on other alternatives.
Not placing a bet on something is, itself, a bet.
Most bets are bets against ourselves
Our beliefs drive the bets we make:
The more accurate our beliefs, the better the foundation of the bets we make.
People are credulous creatures who find it very easy to believe and very difficult to doubt.
how we form beliefs was shaped by the evolutionary push toward efficiency rather than accuracy.
many of our commonly held beliefs are untrue.
Instead of altering our beliefs to fit new information, we do the opposite, altering our interpretation of that information to fit our beliefs.
our beliefs drive the way we process information.
Disinformation is different than fake news in that the story has some true elements, embellished to spin a particular narrative.
The Internet is a playground for motivated reasoning.
companies like Google and Facebook use algorithms to keep pushing us in the directions we’re already headed. By collecting our search, browsing, and similar data from our friends and correspondents, they give users headlines and links that cater to what they’ve divined as our preferences.
the smarter you are, the better you are at constructing a narrative that supports your beliefs, rationalizing and framing the data to fit your argument or point of view.
we all have a blind spot about recognizing our biases. The surprise is that blind-spot bias is greater the smarter you are.
We can train ourselves to view the world through the lens of “Wanna bet?” Once we start doing that, we are more likely to recognize that there is always a degree of uncertainty, that we are generally less sure than we thought we were, that practically nothing is black and white, 0% or 100%.
practically every fact we’ve ever known has been subject to revision or reversal. We are in a perpetual state of learning, and that can make any prior fact obsolete.
of all 187 species of mammals declared extinct in the last five hundred years. More than a third of those species have subsequently been rediscovered.
We would be better served as communicators and decision-makers if we thought less about whether we are confident in our beliefs and more about how confident we are.
Acknowledging uncertainty is the first step in measuring and narrowing it.
There is no sin in finding out there is evidence that contradicts what we believe. The only sin is in not using that evidence as objectively as possible to refine that belief going forward.
3 Bet to Learn: Fielding the Unfolding Future
But before getting to the solutions, we must first understand the problem.
Outcomes are feedback
