Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts by Annie Duke was a surprisingly excellent read. The last book that I read, Little Bets, discussed the importance of taking a “betting framework” into our lives and decisions, however Thinking In Bets was able to not only express the same ideas as Little Bets, but to provide an entirely more comprehensive and compelling framework for how making bets in life actually works.
Annie Duke approaches her book with the background of a professional poker player who has spent decades honing a unique and powerful skillset. She describes how to approach life’s experiences with a betting mindset to understand the actual probability of success and to separate our decision making processes from a wide range of potential cognitive biases. By the end of the book I was persuaded to approach more issues within my own life with a betting mentality to cut through my biases and the uncertainty of the world.
So what did I think?
The Tragedy of 20/20 Hindsight
Duke begins the book with a discussion of “resulting”, the process of defining the quality of a decision based on the results that it created, regardless of how likely the results actually were before they happened. Duke begins this discussion with a case study from Football, but as I prefer politics to sports, the example that stuck out more to me was that of the 2016 election.
I remember sitting in a politics class the day after the election thinking, how could everyone have gotten this so wrong. But as Duke points out, Donald Trump was regularly given between a 30-40% chance to win the election. Hillary Clinton was the better bet, but Trump winning was not the aberration that it may have initially seemed, 30% odds to win still happen 30% of the time. On its own resulting is not a new or novel idea, but Duke provides a simple solution to help prevent unfairly judging the past decisions by the actual results, quite simply to ask, what were the odds?
Hindsight bias is the tendency, after an outcome is known, to see the outcome as having been inevitable. When we say, ‘I should have known that would happen,’ or ‘I should have seen it coming,’ we are succumbing to hindsight bias
The simple act of asking yourself to quantify the odds can free us from the mental block that hindsight can create. If you make a decision that ends up going badly, being able to review the decision logically to determine if things going sour were 80% likely or 8% likely can make a huge difference not only in the quality of our analysis, but in removing an unfair burden of shame that may have been present before. I love the idea of reviewing past decisions with a odds based mentality rather than a results focused one.
But Aren’t Odds and Probability Like, Hard?
My favorite part of the book came from Dukes encouragement to incorporate uncertainty into the way we think about our beliefs. She argues that uncertainty will always be present, but that acknowledging it is the first step in measuring and narrowing the uncertainty. We can never be 100% sure of the future, but by trying to put a simple percentage on our certainty we force our brains to consider what could go wrong, and we allow others to more easily contribute doubts or counterarguments.
Job and relocation decisions are bets. Sales negotiations and contracts are bets. Buying a house is a bet. Ordering the chicken instead of the steak is a bet. Everything is a bet.
It’s easy to get bogged down in the process of giving your beliefs a numerical label of confidence if you approach the process for a need for certainty. But certainty isn’t required in this betting process, the truth is the numbers don’t really matter and that communicating that you are 75% certain isn’t much different from 80%, the numbers mean less than the intention behind the bet. If everything is a bet, take the time to try thinking about choices that way.
I like the odds based approach because even a causal usage without any real methodology still provides a number of benefits with little opportunity cost for myself and those I interact with.
Me Happy? What Are The Odds?
Duke asks the reader to imagine that they are in a casino and that they start the night by winning a number of hands bringing them up $1,000 over where they started. Then, over the course of the night they lose all $1,000 but they leave the casino with the same amount of money they walked in with, what would they likely feel? If that same person quickly loses $1,000 but over the course of the night are able to win all of it back, walking out of the casino with the same amount of money they walked in with, what would that person likely feel?
The stories that we tell ourselves have power over our perspectives and our lives. Duke describes how making small adjustments to our mindset can make large adjustments to how we actually feel about an event. Luck always will play a role in our lives and being able to rationally identify when things simply didn’t go our way and times when we made legitimate mistakes can play a huge role in our own happiness.
Ideally, our happiness would depend on how things turn out for us regardless of how things turn out for anyone else. Yet, on a fundamental level, fielding someone’s bad outcome as their fault feels good to us. On a fundamental level, fielding someone’s good outcome as luck helps our narrative along.
Developing the self-awareness that a betting mindset requires has the tangential benefit of providing control over the stories that we tell ourselves. I am 70% confident that thinking in bets can increase my own happiness, but ultimately only time can tell.
