Thinking in Bets
Making Smarter Decisions When You Don’t Have All the Facts
Annie Duke, 2018
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Part I: Life is Like Poker, Not Chess
- Decisions vs. Outcomes: Good decisions can lead to bad outcomes, and bad decisions can sometimes lead to good outcomes.
- Chess vs. Poker: Chess is mostly skill-based with limited luck, while poker involves both skill and uncertainty—similar to real-life decision-making.
- Resulting: The tendency to judge decisions based on outcomes rather than the quality of the decision-making process.
Part II: Thinking in Bets
- Embracing Uncertainty: Every decision is a bet on a future outcome with incomplete information.
- Probabilistic Thinking: Assigning probabilities to possible outcomes can lead to better decisions.
- Shifting from Certainty to Likelihood: Instead of saying, “I’m sure,” say, “I’m 80% confident.”
Part III: The Power of Group Thinking
- Constructive Skepticism: Seeking feedback from diverse perspectives helps reduce bias.
- Truth-Seeking Groups: Surrounding yourself with people who challenge your thinking leads to better decision-making.
- Diversity in Thought: Avoiding echo chambers and seeking varied opinions improves judgment.
Part IV: Emotion and Bias in Decision-Making
- Cognitive Biases: Humans are wired to seek confirmation and avoid uncertainty.
- Managing Emotions: Emotional decisions often ignore probabilities and lead to poor outcomes.
- Ulysses Contracts: Creating pre-commitment strategies to make better future decisions (e.g., setting rules for oneself ahead of time).
Part V: Learning from Mistakes
- Outcome Fielding: Instead of attributing success to skill and failure to luck, analyze all decisions objectively.
- Tracking Bets: Keeping a decision journal helps separate luck from skill over time.
- Long-Term Thinking: Focusing on long-term patterns rather than short-term results improves decision quality.
Key Takeaways
- Life is filled with uncertainty; treating decisions as bets can improve reasoning.
- Thinking in probabilities helps reduce overconfidence and hindsight bias.
- Surrounding yourself with diverse, truth-seeking individuals leads to better decision-making.
- Analyzing decisions separately from outcomes leads to continuous improvement.