In her book, Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts, Annie Duke draws on examples from business, sports, politics, and poker to share tools anyone can use to embrace uncertainty and make better decisions.
These are some of my favorite quotes and takeaways from reading the book.
Humans tend to equate the quality of a decision with the quality of its outcome. Poker players have a word called “resulting.” We can fall into the trap of resulting when we change our strategy just because a few decision calls did not turn out well in the short run.
Like resulting, hindsight bias is another similar trap. We experience hindsight bias when we succumb to seeing an outcome inevitable only after the outcome is known. This bias causes us to link results incorrectly with decisions even though the relationship between decision and results is not so perfectly correlated.
Our brains were built for quick decisions leading to survival, not rationality. When we work backward from results to analyze why they happened, we are susceptible to various cognitive traps. Our goal should be “… to get our reflexive minds to execute on our deliberative minds’ best intentions.”
Decision-making in life is more like playing poker than playing chess. Poker is a game of decision-making under the conditions of incomplete information and uncertainty over time. While valuable information can remain hidden throughout the decision-making process, there is also an element of luck in any outcome. Learning from the results and separating the element of chance from our decisions can be difficult.
To measure our decisions’ quality, we may need to redefine our definitions of “right” vs. “wrong” decisions. We need to do this for two reasons. First, the world is a pretty random place with luck making consistently precise predictions difficult. Second, being wrong hurts us more than feeling good about being right. We need to recognize this emotional imbalance when we assess the quality of our decisions.
So, what makes a decision great if it is not just with a great outcome? Annie Duke stated:
A great decision is the result of a good process, and that process must include an attempt to accurately represent our own state of knowledge. That state of knowledge, in turn, is some variation of “I’m not sure.”