Takeaways: Thinking in Bets by Annie Duke
Author: Annie Duke
Despite her World Series of Poker-winning bona fides, Annie Duke wants you to know her book, Thinking in Bets, isn’t a poker book. So much so, “Why This Isn’t a Poker Book” is the first chapter title. Duke doesn’t entirely escape her past, though; Thinking in Bets draws from the skills honed over years at the poker table to help improve our own decision making.
Describing the world as probabilistic and full of unavoidable uncertainty, Duke provides practical advice for making better decisions. Despite providing remedial lessons on behavioral economics and decision theory and belaboring many examples, Thinking in Bets is useful for those who want to make better decisions more often.
For starters, Duke gives us a great new term for an old behavior: “resulting.” Resulting, Duke says, is combining uncertainty and hindsight bias to tell ourselves our result was the only possible result. Bet on red and lost all your money? Of course, it turned out that way! Never mind doubling your money was almost as likely. Late for work and speeding?? You were bound to get that ticket! Never mind most speeders do so without consequence. Even when we know an outcome occurs 20% of the time, we nevertheless feel it was inevitable when the unlikely 20% occurs.
Duke also encourages uncertainty. Even if there is an objectively correct answer, saying “I’m not sure” is perfectly acceptable! When we’re thinking hastily, we have a tendency to jump to conclusions. In my own decision-making, I try to stay at “I’m not sure” as long as possible. Otherwise, I’m increasing my risk of being sure of something that isn’t so—and that’s dangerous.
All our decisions are bets on the future. Choosing a college is a bet. Choosing an entree at a restaurant is a bet. We can improve decision outcomes by explicitly framing our decisions as bets. I just bet the Quinoa bowl I ate for lunch would be tasty and filling without being too heavy. It was a good bet, but a bad outcome because the restaurant drowned it in oil. Even good bets bust sometimes, so instead of focusing on outcomes, we’re best served by focusing on our decision process. A better process would have included inquiring about this specific restaurant’s recipe before ordering. Evaluating potential outcomes against their likelihood and “betting” helps us make better, more rational choices.
If every decision is a bet on the future, then every outcome provides feedback. We either win or lose our bet. This isn’t necessarily useful alone, but in aggregate, this feedback helps us improve our decision-making by honing our ability to set odds.
Humans generally believe what we hear. Even when we later learn what we heard is false, we tend to hold on to the belief anyway. In the early 1990s, Harvard psychologist Daniel Gilbert demonstrated that hurried people tend to believe everything they read as true (even when false statements are color-coded). As social animals, our brains are wired to work this way: first, we believe, then, later, we unbelieve if we must.
Duke suggests using the buddy system to mitigate our biases. We often fool ourselves. Including a second person aids our decision process. Our buddy walks through the decision to make sure we’re considering each angle.
A decision accountability group is a collection of such buddies, adding social pressure to stay true to our decision process. In Duke’s case, fellow poker pros pressured her to follow through on daily loss limits. When she instinctively wanted to put more money on the table after hitting her loss limit, the pressure of explaining this decision to her accountability group helped her walk away.
When neither a buddy nor an accountability group is available, Duke suggests Jerry Seinfeld. Specifically, she references a Seinfeld episode where Jerry distinguishes between “Day Jerry” and “Night Jerry” as if he were two different people. Night Jerry wants just one more drink, but Day Jerry will suffer the consequences. This mental time travel can help us consider the consequences for our future selves.
Another form of mental time travel is the 10-10-10 process. Consider a decision’s impact in 10 minutes, in 10 months, and in 10 years. This process forces us to explicitly look beyond our decision’s immediate consequences.
Ulysses, sailing home to Ithaca after the Trojan war, was aware of the perilous Island of the Sirens. The monsters, pretending to be beautiful women, lured sailors to their rocky doom with enchanting voices. To avoid the Sirens’ temptations and remain on course, he ordered his crew to fill their ears with wax and bound himself to the ship’s mast until they cleared the dangerous islands. Duke calls this the “Ulysses Contract.” We should bind ourselves to decisions we’ll be tempted to rethink to our detriment. Deciding not to drunk dial your ex is easier when their phone number is removed from your contacts. Avoiding a 2 A.M. chocolate binge is easier when there’s no chocolate in the house.
For weightier decisions, Duke suggests more thorough tools. They tend to work well in groups where multiple people can offer diverse contributions.
- “Scenario Planning” imagines a variety of future outcomes and assigns each a likelihood.
- “Backcasting” imagines the desired outcome then works backward to fill in how it happened.
- “Pre-mortems” are a form of backcasting which helps spot danger. Imagining a bad future outcome then predicting events and decisions leading up to it creates a map of pitfalls to avoid.
- “Wargaming” involves role-playing a scenario to learn how events might unfold over multiple decisions.
- “Red Teaming” is a form of wargaming where a group role plays an active adversary: the Red Team. The enemy’s efforts can identify weaknesses that might lead to bad outcomes.
Thinking in Bets encouraged me to treat each decision as a bet and analyze it accordingly. Duke’s terms, like resulting and Ulysses contracts, help me a label and standardize my decision analysis. Tools like Day/Night Jerry and 10-10-10 remind me to evaluate decision outcomes over time. Given the number of decisions we make each day, even small improvements will compound to make a world of difference.