Thinking in Bets, by Annie Duke
One sentence summary of this book
All decisions are bets with something on the line, thinking of them as bets improves decision quality.
Bigger summary of the book
The author captures the full scope of the book quite well with this sentence
The promise of this book is that thinking in bets will improve decision making throughout our lives. We can get better at separating outcome quality from decision quality, discover the power of saying “I’m not sure”, learn strategies to map out the future, become less reactive decision makers, build and sustain pods of fellow truth-seekers to improve our decision process, and recruit our past and future selves to make fewer emotional decision.
Of all of this content outlined above, 90% of the value is in the first few chapters that talk about separating outcome quality from decision quality. That is the key idea here and could be a pamphlet or an article.
Much of the rest of the book is dedicated to giving examples, trying to convince the reader to improve their decision making (they are already reading this book so…), and fleshing out ideas like creating pods of people who challenge each other.
What are 3 key ideas from this book?
We inherently evaluate the quality of our decisions by the quality of the outcome. This is flawed.
A good decision can have a bad outcome, and bad decision can have a lucky outcome.
This author calls this “resulting”.
Betting Helps Prevent Resulting
- Turning someone’s evaluation of a situation into a bet, seems to jolt them back into critical thinking. e.g. “how likely do you think it is that X will happen? Wanna bet?”
- Sean’s note: this may be related to what’s on the line. If there is not bet, then the only thing on the line is your feelings about yourself or your past actions. Often we unconsciously pick the answer that matches our identity rather than the most likely. Putting money on the line moves things back to a future outcome.
Life is more like Poker than Chess
- Chess is often used as an allegory for life or for war. But poker is more similar.
- In chess you know all the other players’ positions, what pieces they have, you can see all of your own, the conditions do not change.
- In poker, a new card can change everything.
- Chess is a game of complete information and poker is a game of incomplete information.
- Sean’s note: they are still both deterministic and not subject to the rules of chaotic systems like real life.
- If chess were more like life, pieces would appear and disappear at random, you would only be able to see some of the board, and the rules could change at any time.
All decisions are bets
“By treating decisions as bets, poker players explicitly recognize that they are deciding on alternative futures, each with benefits and risks”
“Every decision commits us to some course of action that, by definition, eliminates acting on other alternatives. Not placing a bet on something is, itself, a bet. Choosing to go to the movies means that we are choosing to not do all the other things with our time that we might do during that two hours. If we accept a job offer, we are also choosing to foreclose all other alternatives: we aren’t sticking with our current job, or negotiating to get a better deal in our current job, or getting or taking other offers, or changing careers, or taking some time away from work. There is always an opportunity cost in choosing one path over others.”
The author doesn’t have enough material for a full book and ends up stretching the ideas past the point of utility. She even dedicates large portions of the book to less relevant ideas about forming pods of people who help challenge each other’s decision-making.
In some ways this makes sense, she’s trying to reproduce the accountability friend group she had when playing poker. But I don’t think you can create this in the real world simply because you want to do so.
Any quotes to pull from this book?
“Take a moment to imagine your best decision in the last year. Now take a moment to imagine your worst decision.
I’m willing to bet that your best decision proceeded a good result and the worst decision preceded a bad result.”
This is a great way to show someone that we are naturally subject to this flawed reasoning.