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

Book Author: Annie Duke

Is life more akin to a game of poker or chess?

This intriguing question captured my attention while reading "Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts" by Annie Duke, a former professional poker player.

Chess is a well-defined form of computation, while real life consists of uncertainty, risk, and occasional deception, prominent elements in poker. Poker is a strategic card game of skill and luck, where winning involves mastering the art of betting, bluffing, and making the best possible hand with the cards dealt to you. This book draws on Annie’s extensive experience in poker—a game of incomplete information, high stakes, and significant elements of chance—to develop a framework for better decision-making in life and business amidst uncertainties.

“Resulting”

One of the book's key insights is "resulting," where people judge the quality of their decision based on the outcome rather than the decision-making process itself. The author emphasizes the role of luck and other uncontrolled factors in nuanced decision-making, and the outcome of decision-making does not fully reflect the quality of the decision-making process.

A great decision is the result of a good process, and a good process includes an attempt to accurately represent our own state of knowledge. So, when we run the process to represent the state, we use uncertainties to our advantage and, instead of being sure, we try to figure out how uncertain we are, making the best guess at the chances associated with different outcomes. Even when the result is not positive, it just means one event in a set of possible futures has occurred.

“The Buddy system”

The way we process information is influenced by our pre-existing beliefs. How we form beliefs and the flexibility of changing them will have consequences in the process. The book suggests a strategy of creating "truth-seeking groups," or "belief calibration groups," to discuss decisions and beliefs in a constructive, non-confrontational manner.

In this process, it's not about verifying whether we are confident, but about figuring out how confident we are by exposing ourselves to diverse perspectives and critical feedback, which can help identify biases, challenge assumptions, and refine thinking. At the same time, when betting on high stakes, this supporting network can also help set accountability and mitigate stress and isolation.

“Mental time travel”

Poker players face the unique decision-making challenge of getting the collision of past, present, and future selves to occur at the moment of making a decision and executing it. "Mental time travel" is another innovative strategy Duke discusses, which involves aligning in-the-moment decisions with long-term objectives. One of the goals of mental time travel is to move regret in front of our decisions, and we can do this by imagining how our future selves are likely to feel about the decision or by imagining how we might feel about the decision today if our past selves had made it.

This approach not only influences us to make better decisions but also helps us treat ourselves more compassionately afterward.

This book offers a perspective to recognize the world with its uncertainties and applies the framework and strategies from poker to make better decisions, even when the odds seem stacked against you. If the outcome of this round is not good, improve your process and get ready for the next one.

Why I Recommend This Book

I was once someone who felt deeply anxious about life's uncertainties, and perhaps, to some extent, I still am. However, this book's perspective of life to poker has provided me with a new mental framework. It has shifted my perspective from fearing and attempting to control uncertainties to embracing them and strategically betting on the unknown.

Uncertainty is a constant companion in the venture. Embracing it fully, regardless of the specific game you're playing, and concentrating on refining the process to better navigate the accuracy of uncertainties can offer individuals a fresh perspective and approach to decision-making.