Thinking in Bets
Most of our decisions are bets against all future versions of ourselves that we are not choosing.
“Thinking in Bets”, written by a world-class poker player, Annie Duke, is about becoming better at decision-making. It’s clearly structured, well written, full of captivating stories, reasonable advice and has an extensive list of further reading.
What is a GOOD DECISION? The book starts with one astute observation. When asked about our best and worst DECISIONS, we actually talk about our best and worst OUTCOMES. In poker, this tendency to equate the quality of decisions with the quality of their outcomes is called “RESULTING”. Make good decisions and you win, bad decision - you lose. Iron logic, right?
Well, a decision is not necessarily a mistake just because it didn’t work out. The end result might have been influenced by the things beyond our knowledge and control - to keep it simple, we can just call those things LUCK.
We happen to be really bad at separating SKILL and LUCK. When we walk backward from the outcome trying to understand why things happened that way, we cross a minefield of various cognitive traps:
HINDSIGHT BIAS. Once the outcome is known, we tend to think about it as having been inevitable.
MOTIVATED REASONING. We hate challenging or changing our beliefs. So, we cherry-pick the data that confirm them.
SELF-SERVING BIAS. We always need a positive self-narrative. When good things happen, we credit them to our skills. When the outcome is negative, we claim we got unlucky.
SCHADENFREUDE. And it’s just the opposite when we judge others: we fail to give credit when others succeed, and when they fail, we blame it on their poor skill or even rejoice about those bad outcomes.
BLIND-SPOT BIAS. Last but not least, we are good at seeking all those biases in others but not in ourselves.
In sum, we go to great lengths to create a positive self-narrative and an illusion of a strong connection between results and the quality of our decisions. We hate chaos and uncertainty, not feeling in control.
We hate saying “I don’t know”, “I’m not sure” because this can be perceived as a sign of weakness.
To be sure, there are situations where the quality of our decisions is closely related to the outcomes. Take chess, where for each position, there exists, at least in theory, the best possible decision. But life is poker, not chess: we make most of our decisions while facing some form of uncertainty.
In this way, most of our decisions are BETS, bets on an uncertain future. So how can we become better at taking those bets?
We need to become a little bit better at embracing uncertainty, making peace with it.
We need to become a little bit more open to perspective-taking and assessing many alternative hypotheses.
We need to become a little bit more willing to do TRUTHSEEKING even if it means reconsidering our beliefs.
As these actions require us to use our rational mind and we are not really well wired for rationality, the author suggests we’d be better off not doing it alone.
She offers a few ideas for a well-chartered decision-making buddies group. The key one is the group DIVERSITY.
The author also suggests ways of engaging with our future selves to make better decisions now. After all, "most of our decisions are bets against ourselves: we are not betting against another person. Rather, we are betting against all future versions of ourselves that we are not choosing.” And becoming just a little bit better at making individual decisions can have a compounding positive effect on the quality of our lives.