Thinking in Bets | Annie Duke

Summary of: Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts
By: Annie Duke

Introduction

In ‘Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts’, Annie Duke explores the concept of decision-making through the lens of betting. As we navigate through a world full of incomplete information and unpredictable outcomes, it’s helpful to treat decisions as bets based on a likely future outcome, much like poker players do. By recognizing that our decisions aren’t definitively right or wrong, this mindset helps us to embrace uncertainty and think in terms of probability. Duke stresses the importance of developing good-quality beliefs, seeking truth and objectivity, and analyzing our decision-making processes for self-improvement.

The Danger of Linking Outcome to Decision Quality

The outcome of a decision does not always determine its quality. Just like in poker, life is a game of incomplete information and luck. It’s crucial to avoid confusing the two by thinking probabilistically instead of believing a decision is 100% right or wrong. Public opinion on Seattle Seahawks coach Pete Carroll’s decision to pass instead of handing the ball off in the last 26 seconds of Super Bowl XLIX exemplifies how people can be misled by an outcome’s quality. In truth, decisions are bets and should be evaluated based on their probabilities, not outcomes.

Truth-Seeking for Better Decision Making

Making good decisions requires good quality beliefs which means we need to be willing to do some work in the form of truth-seeking. Unfortunately, our inherent tendency to believe things is still present and it’s difficult to change beliefs once they’re formed. However, we can work around our tendencies with a simple phrase: “Wanna bet?” This phrase triggers us to look more closely at our beliefs and be objectively accurate, which is a lot more like truth-seeking and helps us make better decisions.

In order to make good decisions, we need good-quality beliefs which are ideas about our choices that are informed and well thought-out. However, forming these good-quality beliefs requires us to do some work in the form of truth-seeking. This means striving for truth and objectivity, even when it goes against our held beliefs. Unfortunately, our inherent tendency to believe things is still present and it’s difficult to change beliefs once they’re formed.

Our evolutionary ancestors didn’t see questioning new beliefs as a high priority since it could be dangerous. With the development of language, we could communicate things that our own senses had never experienced, leading to the ability to form abstract beliefs. However, this new ability worked via our old belief-forming methods, and questioning remained something we did infrequently.

In experiments conducted by Harvard psychology professor Daniel Gilbert and his colleagues in 1993, participants read statements color-coded as either true or false. Later, they were asked to remember which statements were true and which were false while being distracted to increase their cognitive load. In the end, the subjects’ tendency was to simply believe that statements had been true – even those that had “false” color-coding.

Beliefs are hard to change because we seek out evidence that confirms our belief, and ignore or work against anything contradictory. However, we can work around our tendencies with a simple phrase: “Wanna bet?” This phrase triggers us to look more closely at our beliefs and be objectively accurate, which is a lot more like truth-seeking and helps us make better decisions.

Whenever there’s something riding on the accuracy of our beliefs, we’re less likely to make absolute statements and more likely to validate those beliefs. Focusing on accuracy and acknowledging uncertainty is a lot more like truth-seeking, which helps us get beyond our resistance to new information and gives us something better to bet on.

Learning from Outcomes

Reviewing outcomes helps improve future decisions by analyzing the factors of skill, luck, and unknown information that led to them. It is crucial to differentiate when to blame skill or luck to avoid repeating mistakes. However, analyzing outcomes objectively can be limited by self-serving biases while blaming others and taking credit for good results. Looking at other people’s outcomes can help to circumvent self-serving biases, but it also comes with limitations. When reviewed objectively, outcomes can provide valuable insights and refine beliefs that can lead to better decision-making.

The Power of Phil Ivey’s Good Habits

Phil Ivey, a renowned poker player, owes his success to his good habits. Pulitzer-prize-winning reporter Charles Duhigg’s book, The Power of Habit, explains that habits work in neurological loops with three parts: cue, routine, and reward. To change a habit, one must leave the cue and reward intact but change the routine. Phil Ivey’s poker habits revolve around truth-seeking and accurate outcome fielding rather than the self-serving bias most players possess. His outstanding habits helped him win a 2004 tournament and improved his gameplay. Individuals who want to improve the way they field outcomes should consider thinking of them as bets, which forces them to look into the causes and become more objective and compassionate when evaluating outcomes.

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