Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts

by Annie Duke

Bronowski was a chess enthusiast and asked him to clarify. “You mean, the theory of games like chess?” Bronowski quoted von Neumann’s response: “‘No, no,’ he said. ‘Chess is not a game. Chess is a well-defined form of computation. You may not be able to work out the answers, but in theory there must be a solution, a right procedure in any position. Now, real games,’ he said, ‘are not like that at all. Real life is not like that. Real life consists of bluffing, of little tactics of deception, of asking yourself what is the other man going to think I mean to do. And that is what games are about in my theory.’”

Resulting, assuming that our decision-making is good or bad based on a small set of outcomes, is a pretty reasonable strategy for learning in chess. But not in poker—or life.

What makes a decision great is not that it has a great outcome. 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.”

In most of our decisions, we are not betting against another person. Rather, we are betting against all the future versions of ourselves that we are not choosing.

We use all parts of our brain. The 10% figure was made up to sell self-improvement books; neural imaging and brain-injury studies disprove the fabrication.

“Experience is not what happens to a man; it is what a man does with what happens to him.”

Blaming the bulk of our bad outcomes on luck means we miss opportunities to examine our decisions to see where we can do better.

We don’t win bets by being in love with our own ideas. We win bets by relentlessly striving to calibrate our beliefs and predictions about the future to more accurately represent the world.