Review:
Bad personal decisions are the leading cause of death, according to a study by Fuqua School researcher Ralph Keeney. So why should you learn making better decisions from a professional poker player, of all persons? In Thinking in Bets, author Annie Duke states that life is a lot more like poker than chess. In chess, both players have complete information. Every piece is visible to both players, and every possible next move is apparent.
In poker, players know some of the cards that are in play, but have no information on which cards the opponents hold, or which card will be drawn next. Life is a lot like that, in that you can know yourself but can never be certain about which event will happen next. Making decisions in a poker game is tough, because you only have a part of the available information, and decisions in life are tough for the exact same reason. This paves the way for all sorts of fallacies:
Fallacies to fall for
The easiest trap to fall into is to be too sure about something. Many people know that too much sugar makes children hyperactive, that Albert Einstein failed at maths as a child and that James Watt invented the steam engine. And yet, all those facts are on Wikipedia’s list of common misconceptions, because they are not, in fact, true. How sure are you that you always worked hard, that criminality used to be lower, or that everything was generally better in the past? Probably too sure.
Another fallacy to commit is to rate decisions by their outcome alone. There is a German proverb stating that “success proves right”, and like most proverbs, it is a bit stupid.
Imagine some guy buying lots of lottery tickets. They spends all of their disposable income each month, then goes on to cash in all valuables and retirement savings. Finally, they skips paying rent and takes out bank loans, all to buy more lottery tickets. And with the last ticket, now broke and homeless, they wins millions. Does this success prove them right? Have they made sound and sensible decisions? And yet, the outcome is usually the only criterium we use to evaluate if our chosen path was good. We simply cannot accept that the outcome may be entirely or partially random instead of based on our merits. Unless we are doing badly of course, then we happily credit random chance for this.
If it is very clear to you, that the lottery winner just got lucky, then congratulations! We tend to evaluate other people exactly antithetical to ourselves. When others do well we suspect random chance, while in our opinion other people fail because of bad decision-making.
The third mistake people can make is to indulge in self-serving bias. We don’t like to have our opinions challenged. We read news sites that confirm what we believe to be true, we meet exclusively with people who share our opinions and we easily spin a confirming narrative around everybody and everything that might contradict us. I remember a forum post of a woman complaining about her regular bus ride. According to her, her two young children got constantly scolded and yelled at by the bus driver and several passengers, for no other reason than “normal child’s play”. There are two possibilities here: (a), the woman lives in the one German neighborhood where people fanatically hate children, or (b), her children are the devil incarnate and tried to dismantle the bus while still driving. Which one do you think is more likely?
For another example just look at any topic with two groups supporting different views. Of course all and every person on either side firmly believes that their side is angelic, while the guys on the other side probably strangle puppy dogs for sports. Or even worse, that the other guys only SAY they have an opposite view while secretly knowing that your side is, in fact, correct. Your views on politics, race, money, culture and your children? Maybe you’re wrong, maybe it’s just you, maybe you are that woman on the bus. And you need to stop!
Beating the bias
How can we make better decisions, then? Thinking in Bets has some simple but stellar tips for us. By treating every choice as a bet against ourselves. Just by avoiding to hold a yes-or-no opinion and instead being a more realistic 75% sure, we more readily considerate the opinions of others. If I am sure and you oppose, one of us has to be entirely wrong. If I’m 75% sure and you oppose, I can use your ideas to tune my opinion, and afterwards I’m 60% sure, and closer to the truth.
Separating chance and skill in outcomes is tricky, but remember how we judge others much more harshly than ourselves? If something good happens, imagine it happening to someone you don’t like, and you can easily assess the portions that were random chance.
The best, least biased decisions are those that got challenged and refined in discourses. Some companies run “red teams” with the explicit task of challenging or even sabotaging project ideas. That way, only projects that are sound and sensible reach the implementation stage. You can form your own decision team that way. Surround yourself with people having diverse opinions and experiences, and have them constantly challenge your decision-making. If you can’t get a decision team, get a decision buddy. If you don’t have a buddy, check your decision with your future self (remember?). Will five-years-you approve your career path? Will tomorrow-morning-you appreciate your decision to have another beer tonight?
Thinking in Bets
Thinking in Bets was not entertaining to read. I actually found it to be rather dull. Sometimes Duke felt the need to hammer home a simple point, sometimes more complex concepts are barely touched. The ideas presented in Thinking in Bets are exemplified with poker characters which I found unrelatable and forgettable. Nevertheless I am hard pressed to think of another recent book that was as relevant to my daily life and as easy to apply as Thinking in Bets. For these reasons, I thoroughly recommend Thinking in Bets to everybody who has to make difficult decisions without having all of the information.
Key points:
- Treat decisions as bets against yourself.
- Evaluate processes, not outcomes.
- Separate chance and merit components of results.
- Team up for decisions – with yourself, if you must.
Author affiliations:
Annie Duke is a professional poker player with most of a PhD in psychology turned decision strategy consultant. She has her own website.
Review copy:
copy bought
Portfolio/Penguin (February 6, 2018)
ISBN-10: 0735216355
ISBN-13: 978-0735216358
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BUSINESS & ECONOMICS
Penguin
2018
288
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