Thinking In Bets
by Annie Duke

  • Behaviour
  • Ashto = 7/10
  • Jonesy = 6/10
Thinking in Bets

Thinking In Bets – by Annie Duke

‘Making smarter decisions when you don’t have all the facts’ follow the book ‘Thinking In Bets’.

We make little decisions every single day. We also make bigger decisions regularly – moving house, changing jobs, investing in the stock market, starting/ending a relationship, and so on. In pretty much every case, we don’t have all of the information we need, and there is always an element of luck in the outcome. This book is all about viewing every decision as a ‘bet’ so that we can make better decisions that will serve us better over the long term.

 

 

Thinking In Bets Summary

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

 Poker like life, is a decision about an uncertain future.  Like in poker, there are two things that determine how our lives turn out – quality of our decisions and luck. Thinking in bets is about a move towards objectivity. This book outlines how we can optimize both our decisions and luck to get the best possible outcomes.

 Chess is not a game (by game theory standards). It is a well-defined form of computation. You may not be able to work out the answers, but in theory there must be a solution – a right procedure in any position. Real life is not like that. It consists of bluffing , of little tactics of deception, of asking yourself what is the other man going to think I mean to do. Trouble follows when we treat life decisions as if they were chess decisions. If you lose in chess , it must be because there were better moves you couldn’t see. Poker on the other hand, is a game of incomplete information. Life is more like poker, you can make the smartest decision and still have it blow up in your face. A novice can beat a world champion in poker, that’s a principle depicted in the book Thinking in Bets

   Everything is a Bet

 Job and relocation are bets. Sales negotiations and contracts are bets. Buying a house is a bet. When we make a decision, we really should admit we are not sure. Typically if we make a decision and it works out well, we would admit we thought we were right all along. But in reality, you could be 58% sure. 

 Resulting

   Decisions are probabilities, we don’t have all the information. You don’t need to copy someone who has had a good outcome, like in poker, they could have been lucky and in fact made a bad decision. 

 “Resulting” is assuming how good the decision was, is a function of the result. You might change the strategy because of what happened, this is irrational. We can make good decisions and have bad outcomes, conversely we can make bad decisions and have good outcomes.   Even when it turns out great, you should examine what you did well and what you did poorly and consider how much was luck and how much was skill. Next you can work on doing all you can to improve your odds next time achieving a successful result. We win bets by striving to calibrate our beliefs and predictions about the future to more accurately represent the world. In the long run, the objective person will against the biased person.

  Redefining Confidence

Annie Duke shows us that we should redefine confidence in our beliefs. Motivated reasoning is a phenomenon that used emotionally biased reasoning to produce justifications that make decisions that are most desired rather than most logical. The more intelligent people don’t necessarily choose the logical decision, they are just better at finding supporting arguments for their false beliefs. Instead of thinking of confidence as all-or nothing, our confidence should capture all of the grey in between. 

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