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 concepts and takeaways from reading the book.
“If it weren’t for luck, I’d win every one”
Because of our strong desire to make sense of things around us, we prefer to see strong causal relationships. When our actions and the quality of outcomes do not always correlate due to the random chance involved, we are uncomfortable with our inability to explain everything that happens to us.
Over time, we develop a “self-serving bias.” When we experience bias, we create a self-narrative by taking credit for the excellent result and blaming the poor result on luck, so it will not be our fault. When we figure out why something happened, we look for a plausible reason to fit our wishes. Usually, we want an explanation that flatters us and put us in a good light. When we knew we made an unforced error, we look for ways to minimize our bad feelings.
The trouble with the “self-serving bias” is that it makes it very hard for us to learn from our experience. However, understanding why this pattern emerges is the first step to developing practical strategies to improve our ability to learn from our experience.
We often apply the same black-and-white thinking of “self-serving bias” when we judge other people’s decisions. In those cases, we flip the script where we attribute others’ success as an outcome of luck while the lousy effect as the direct result of their decisions.
These systematic errors in the way we field our peers’ outcomes and our peers come at a real cost. We inhibit ourselves in learning from our and others’ experiences. We also let ourselves off the hook easy while needlessly punish other people for the share of bad luck they might have experienced.
We need to be aware of such shortcomings in our thinking because it does not just come at the cost of reaching our goals but also at the expense of empathy and compassion for others.
“Other people’s outcomes reflect on us”
The way we feel about ourselves comes from how we think we compare with others. This thought pattern is a pervasive habit that can impedes learning. Luckily, we can change our habits through a conscious effort.
By being aware of what makes us feel good about ourselves, we can move toward a more rational fielding of our outcomes and a more compassionate view of others. We can learn more effectively if we work toward an open-minded narrative by striving toward objectivity, accuracy, and truth-seeking.
Furthermore, we should practice giving others credit when it’s due, admitting when our decisions could have been better, and acknowledging that almost nothing is binary or black-and-white.