Thinking in Bets by Annie Duke: Summary and Notes

Thinking in Bets

“Improving decision quality is about increasing our chances of good outcomes, not guaranteeing them.”

Rating: 7/10

Related Books:  How To DecideThe Confidence GameThe Biggest Bluff, The Compound Effect

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Thinking in Bets: Short Summary

Thinking in Bets will teach you how to make smart decisions when you do not have all the facts. Annie Duke offers tips on how to overcome your shortcomings in decision making, and ultimately make wiser decisions.

Life is Poker, Not Chess

Resulting: Judging the quality of a decision based on the quality of the result.

Hindsight bias: Accepting the outcome as inevitable once it occurs.

Here are two reasons why embracing uncertainty can help us make better decisions:

  • It is a more accurate representation of the world
  • When we accept that we are not always sure, we are less likely to fall into the trap of black-and-white thinking

Wanna Bet?

All decisions are bets.

Contrary to what we believe, we don’t make bets against another person in decision making, but against all the future versions of ourselves that we are not choosing.

This is how we think we form our beliefs:

  • We hear something
  • We think about it and then determine whether if it is true or false
  • We form our belief

This is how we actually form our beliefs:

  • We hear something
  • We believe it to be true
  • Only sometime later, if we have the time or the inclination, we think about it and then determine whether it is true or false

Our pre-existing beliefs influence the way we see the world and the way we make decisions.

Here are important questions we could ask ourselves in a bid to vet our beliefs:

  • How do I know this?
  • Where did I get this information?
  • Who did I get it from?
  • What is the quality of my sources?
  • How much do I trust them?
  • How up to date is my informed belief?
  • How much information do I have that is relevant to the belief?
  • What other things have I been confident about that turned out not to be true?
  • What are other plausible alternatives?
  • What do I know about the person challenging my beliefs?
  • What is their view of how credible my opinion is?
  • What do they know that I don’t know?
  • What is their level of expertise?
  • What am I missing?

Incorporating uncertainty in the way we think about our beliefs creates open-mindedness, moving us toward a more objective stance toward information that disagrees with us.

Bet to Learn: Fielding the Unfolding Future

Outcomes are feedback.

The more evidence we attain from experience, the less uncertainty we have about our beliefs and choices.

Any outcome that is a result of conscious decision-making is in the skill category.

Outcomes that are a result of factors beyond our control are placed in the luck category.

Admitting mistakes increases skill and helps you to identify opportunities that others might miss.

The Buddy System

Thinking in bets is often easier with people to help you on the path of truth-seeking in decision making.

It is important to have a go-to group of people with a common interest in thinking in bets.

Here are characteristics of a good group to practice truth-seeking with:

  • A focus on accuracy (over confirmation), which includes rewarding  truth-seeking, objectivity, and open-mindedness within the group
  • Accountability for which members have advance notice
  • Openness to a variety of ideas

Once we are a part of a group that regularly reinforces exploratory thought, the routine becomes reflexive, running on its own.

Accountability: A willingness or obligation to answer to others for our actions or beliefs.

A bet is a form of accountability because one can always be held accountable for what they believe and what they say.

Diversity is the foundation of productive group decision-making.

Dissent To Win

Be a data sharer.

Experts become experts by sharing data. They recognize that the more detail they provide, the better assessment of decision quality they get.

Don’t shoot the message.

Don’t ignore an idea just because you don’t like who or where you come from.

The accuracy of the statement should be evaluated independently truth-seeking of its source.

Universalism requires open-mindedness. Universalism helps you learn from others who are doing well, even if they are your opponents, instead of merely complaining about how lucky they are.

Skepticism: approaching the world wondering why things might not be true rather than why they may be true.

Skepticism is a realization that, while there is an objective truth, not everything we believe about the world is true.

Thinking in bets encourages skepticism by encouraging us to examine what we do and don’t know and what our level of confidence is in our beliefs and our predictions.

Here are some ways to communicate to maximize our ability to engage in a truth-seeking way with anyone:

  • Express uncertainty: If we start by making clear our uncertainty, our audience is more likely to understand that discussion held does not always have to be about right or wrong but about openness to different perspectives
  • Lead with assent: Everyone likes to be affirmed. If we want to engage with someone with whom we have some disagreement, they will be more open and less defensive if we start with areas of agreement, because it is rare that we will disagree with everything that someone has to say. Avoid the language of no. Use ‘and’ more than you use ‘but’ in an expression of possibly polarizing ideas
  • Ask for temporary agreement to engage in truth-seeking: Whenever one is offloading emotion to us, we can ask them if they are looking to vent or if they are looking for advice
  • Focus on the future: Rather than rehearsing what has happened, try engaging about what one might do so that things will turn out better going forward

Adventures In Mental Time Travel

Just as we are accountable to our decision buddies in decision making, we can also engage our past and future selves in decision making and be accountable to them.

Sometimes it takes time for us to know whether we are winning or losing in making decisions where the consequences don’t reveal themselves immediately: In some cases, decisions have to be made repeatedly for the outcome to occur.

Good decisions compound.

The power of regret can be harnessed in decision-making. Regret might keep us from making a bad bet.

In decision making, we could imagine what our future-us is likely to feel about that decision or imagining what we would be feeling today if the past-us had made that decision.

Decisions driven by the emotions of the moment can become a self-fulfilling prophecy, degrading the quality of the bets we make, increasing the chances of bad outcomes, and making things worse.

For us to make better decisions, we need to have a vision for our future.

Scenario planning is a productive skill to develop in decision making because:

  • It reminds us that the future is uncertain, giving a more realistic view of the world
  • It prepares us for how to respond to different outcomes that might respond from our initial decisions
  • Anticipating the range of outcomes keeps us from unproductivity regret
  • By mapping out potential outcomes & probabilities, we are less likely to fall prey to resulting or hindsight bias

Back stating: Imagining we’ve already achieved a positive outcome and thinking about how we got there.