Thinking in Bets:

Making Smarter Decisions When You Don't Have All the Facts

by Annie Duke

After finishing this book in September of 2021, I wrote,

 

"Written by a woman who won over $4 million in competitive poker, this book turned out to be more of a gem than I thought it would be. Excellent, lucid coaching on how to make better life decisions."

 

My clippings below collapse a 288-page book into four pages, measured by using 12-point type in Microsoft Word.

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See all my book recommendations.  

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Here are the selections I made:

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What good poker players and good decision-makers have in common is their comfort with the world being an uncertain and unpredictable place. They understand that they can almost never know exactly how something will turn out. They embrace that uncertainty and, instead of focusing on being sure, they try to figure out how unsure they are, making their best guess at the chances that different outcomes will occur.

 

There are many reasons why wrapping our arms around uncertainty and giving it a big hug will help us become better decision-makers. Here are two of them. First, “I’m not sure” is simply a more accurate representation of the world. Second, and related, when we accept that we can’t be sure, we are less likely to fall into the trap of black-and-white thinking.

 

At one such tournament, I told the audience that one player would win 76% of the time and the other would win 24% of the time. I dealt the remaining cards, the last of which turned the 24% hand into the winner. Amid the cheers and groans, someone in the audience called out, “Annie, you were wrong!” In the same spirit that he said it, I explained that I wasn’t. “I said that would happen 24% of the time. That’s not zero. You got to see part of the 24%!”

 

Look how quickly you can begin to redefine what it means to be wrong. Once we start thinking like this, it becomes easier to resist the temptation to make snap judgments after results or say things like “I knew it” or “I should have known.” Better decision-making and more self-compassion follow.

 

The same thing happened after Donald Trump won the presidency. There was a huge outcry about the polls being wrong. Nate Silver, the founder of FiveThirtyEight.com, drew a lot of that criticism. But he never said Clinton was a sure thing. Based on his aggregation and weighting of polling data, he had Trump between 30% and 40% to win (approximately between two-to-one and three-to-two against) in the week before the election. An event predicted to happen 30% to 40% of the time will happen a lot.

 

Redefining wrong allows us to let go of all the anguish that comes from getting a bad result. But it also means we must redefine “right.” If we aren’t wrong just because things didn’t work out, then we aren’t right just because things turned out well. Do we win emotionally to making that mindset trade-off? Being right feels really good. “I was right,” “I knew it,” “I told you so”—those are all things that we say, and they all feel very good to us. Should we be willing to give up the good feeling of “right” to get rid of the anguish of “wrong”? Yes. First, the world is a pretty random place. The influence of luck makes it impossible to predict exactly how things will turn out, and all the hidden information makes it even worse. If we don’t change our mindset, we’re going to have to deal with being wrong a lot. It’s built into the equation.

 

Poker teaches that lesson. A great poker player who has a good-size advantage over the other players at the table, making significantly better strategic decisions, will still be losing over 40% of the time at the end of eight hours of play. That’s a whole lot of wrong. And it’s not just confined to poker.

 

The most successful investors in start-up companies have a majority of bad results. If you applied to NASA’s astronaut program or the NBC page program, both of which have drawn thousands of applicants for a handful of positions, things will go your way a minority of the time, but you didn’t necessarily do anything wrong. Don’t fall in love or even date anybody if you want only positive results. The world is structured to give us lo...

 

Second, being wrong hurts us more than being right feels good. We know from Daniel Kahneman and Amos Tversky’s work on loss aversion, part of prospect theory (which won Kahneman the Nobel Prize in Economics in 2002), that losses in general feel about two times as bad as wins feel good. So winning $100 at blackjack feels as good to us as losing $50 feels bad to us. Because being right feels like winning and being wrong feels like losing, that means we need two favorable results for every one unfavorable result just to break ev...

 

Are you ready to really wrap your arms around uncertainty, like great decision-makers do? Are you ready to embrace this redefinition of wrong, and to recognize you are always guessing and that those guesses drive how you place your resources? Getting comfortable with this realignment, and all the good things that follow, starts with recognizing that you’ve been betting all along.

 

staying where we are and maintaining the status quo. How does the new job pay compared to what we have now? There are plenty of things we value in addition to money; we might be willing to make less money to

 

In most of our decisions, we are not betting against another person. Rather, we are betting against all the future versions of ourselves that we are not choosing. We are constantly deciding among alternative futures: one where we go to the movies, one where we go bowling, one where we stay home.

 

Have you ever had a moment of regret after a decision where you felt, “I knew I should have made the other choice!”? That’s an alternative version of you saying, “See, I told you so!”

 

Poker players live in a world where that risk is made explicit. They can get comfortable with uncertainty because they put it upfront in their decisions. Ignoring the risk and uncertainty in every decision might make us feel better in the short run, but the cost to the quality of our decision-making can be immense. If we can find ways to become more comfortable with uncertainty, we can see the world more accurately and be better for it.

 

Experience can be an effective teacher. But, clearly, only some students listen to their teachers.

 

Aldous Huxley recognized, “Experience is not what happens to a man; it is what a man does with what happens to him.”

 

The predictable pattern of blaming the bad stuff on the world and taking credit for the good stuff is by no means limited to poker or car accidents. It’s everywhere.

 

Keep the reward of feeling like we are doing well compared to our peers, but change the features by which we compare ourselves: be a better credit-giver than your peers, more willing than others to admit mistakes, more willing to explore possible reasons for an outcome with an open mind, even, and especially if that might cast you in a bad light or shine a good light on someone else. In this way, we can feel that we are doing well by comparison because we are doing something unusual and hard that most people don’t do. That makes us feel exceptional.

 

Talking about winning (even if we are identifying mistakes along the way to a win) is less painful than talking about losing, allowing new habits to be more easily trained. Identifying mistakes in hands I won reinforced the separation between outcomes and decision quality. These discussions also made me feel good about analyzing and questioning my decisions because of the approval I got from Howard and the players I looked up to. I used that approval as evidence that I understood the game and had promise as a player. When they complimented me for finding alternative approaches in my winning hands or understanding the contribution of luck, that felt terrific. In time, I could expand this approach to identifying learning opportunities in any hand I played, not just the winning ones.

 

“The only way in which a human being can make some approach to knowing the whole of a subject is by hearing what can be said about it by persons of every variety of opinion and studying all modes in which it can be looked at by every character of mind. No wise man ever acquired his wisdom in any mode but this; nor is it in the nature of human intellect to become wise in any other manner.” There is a simple beauty in Mill’s

 

Why might my belief not be true? What other evidence might be out there bearing on my belief? Are there similar areas I can look toward to gauge whether similar beliefs to mine are true? What sources of information could I have missed or minimized on the way to reaching my belief? What are the reasons someone else could have a different belief, what’s their support, and why might they be right instead of me? What other perspectives are there as to why things turned out the way they did?

 

CUDOS stands for Communism (data belong to the group), Universalism (apply uniform standards to claims and evidence, regardless of where they came from), Disinterestedness (vigilance against potential conflicts that can influence the group’s evaluation), and Organized Skepticism (discussion among the group to encourage engagement and dissent).

 

“Do you want to just let it all out, or are you thinking of what to do about it next?”

 

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

 

Jerry Seinfeld, on why he doesn’t get enough sleep: “I stay up late at night because I’m Night Guy. Night Guy wants to stay up late. ‘What about getting up after five hours of sleep?’ ‘That’s Morning Guy’s problem. That’s not my problem. I’m Night Guy. I stay up as late as I want.’ So you get up in the morning: you’re exhausted, you’re groggy. ‘Oooh, I hate that Night Guy.’ See, Night Guy always screws Morning Guy.”

 

Backcasting and premortems complement each other. Backcasting imagines a positive future; a premortem imagines a negative future. We can’t create a complete picture without representing both the positive space and the negative space. Backcasting reveals the positive space. Premortems reveal the negative space. Backcasting is the cheerleader; a premortem is the heckler in the audience.

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