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

by Annie Duke

we share the common trait of generally being more rational about the future than the past. It’s harder to get defensive about something that hasn’t happened yet.

This is a good approach to communicating with our children, who, with their developing egos, don’t necessarily need a red pill shoved down their throats. A child isn’t equipped to consent to the challenges of truthseeking exchanges. But they can be nudged.

Ultimately, even with our own kids’ decisions, rehashing outcomes can create defensiveness.

The future, on the other hand, can always be better if we can get them to focus on things in their control.

Process than the outcome

This tendency we all have to favor our present-self at the expense of our future-self is called temporal discounting.

Also called tunneling

By planning ahead, we can devise a plan to respond to a negative outcome instead of just reacting to it. We can also familiarize ourselves with the likelihood of a negative outcome and how it will feel. Coming to peace with a bad outcome in advance will feel better than refusing to acknowledge it, facing it only after it has happened.

While the moving scoreboard has the upside of reminding players that all their decisions have consequences, there is also a downside. The scoreboard, like a stock ticker, reflects the most recent changes, creating a risk that players get caught up in ticker watching, responding emotionally and disproportionately to momentary fluctuations. Poker players think about this problem a lot.

Dashboard should have historical details so we see the trend

Aphorisms like “take ten deep breaths” and “why don’t you sleep on it?” capture this desire to avoid decisions while on tilt.

When you are physically prohibited from deciding, you are interrupted in the sense that you are prevented from acting on an irrational impulse; the option simply isn’t there. That’s the brute-force way to do this kind of time traveling.

This also includes stating things as absolutes, like “best” or “worst” and “always” or “never.”

“Wrong” is a conclusion, not a rationale. And it’s not a particularly accurate conclusion since, as we know, nearly nothing is 100% or 0%. Any words or thoughts denying the existence of uncertainty should be a signal that we are heading toward a poorly calibrated decision.

Not thinking in binary

place a bet we should consider in detail what those possible futures might look like. Any decision can result in a set of possible outcomes.

Scenarios

“When faced with highly uncertain conditions, military units and major corporations sometimes use an exercise called scenario planning. The idea is to consider a broad range of possibilities for how the future might unfold to help guide long-term planning and preparation.”

“A journey of a thousand miles starts with a single step”? Turns out, if we were contemplating a thousand-mile walk, we’d be better off imagining ourselves looking back from the destination and figuring how we got there. When it comes to advance thinking, standing at the end and looking backward is much more effective than looking forward from the beginning.

Dreaming about achieving a goal apparently didn’t help that goal come to fruition. It impeded it from happening. The starry-eyed dreamers in the study were less energized to behave in ways that helped them lose weight.”

Oettingen recognized that we need to have positive goals, but we are more likely to execute on those goals if we think about the negative futures.

Identifying potential roadblocks - duality

Incorporating this type of imagining of the negative space into a truthseeking group reinforces a new habit routine of visualizing and anticipating future obstacles. As always, when a group we are part of reinforces this kind of thinking, we are more likely in our own thinking to consider the downside of our decisions.

Culture of Dissent

When we see how much negative space there really is, we shrink down the positive space to a size that more accurately reflects reality and less reflects our naturally optimistic nature.

It may not feel so good during the planning process to include this focus on the negative space. Over the long run, however, seeing the world more objectively and making better decisions will feel better than turning a blind eye to negative scenarios.

That’s hindsight bias, an enemy of probabilistic thinking.

To some degree, we’re all outcome junkies, but the more we wean ourselves from that addiction, the happier we’ll be.

Test taking mindsets

And even when we make a bad bet, we usually get a second chance because we can learn from the experience and make a better bet the next time.