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Thinking in Bets

Thinking in Bets, by Annie Duke

I’m in the process of making some major life choices, so a book about making wise decision-making seems applicable. I think this book was enjoyable and easy to read. In many ways, it is just another “pop psych” book with little technical content. However, it reinforces many of the common themes that I’ve been reading about and listening about, such as critiquing yourself, finding accountability, and imagining your future self.


In the first chapter, Annie sets the scene for the remainder of the book and explains why the reader should care. Concisely, we each make hundreds or thousands of decision every day. Some of these are quick, reflexive decisions, whereas others are slow, deliberate decisions. Each of these types of decisions is handled by a different circuit in our brains. The goal is to train your reflexive mind to make the same decisions as your deliberate mind. Poker players do this. They have limited time to make a decision, and they have incomplete information about their opponents’ hands and the cards in the deck. During a poker game, it is unacceptable to take large amounts of time to deliberate about a single decision. Opponents can even call the clock on you. Consequently, there is a heavy dependence on the reflexive mind.


The game of life is much the same way. We have incomplete information about the future and about the intentions of other people. Regardless, we are forced to play the odds and make the best decisions that we can. Since there is uncertainty, sometimes well-informed decisions will lead to negative outcomes. On the other hand, it is also possible to get lucky and have ill-informed decisions lead to positive outcomes. Because of this uncertainty and inherent risk, life is more like a game of poker than a game of chess. In chess, the winner simply makes more intelligent moves than his opponent. All pieces and their positions on the board are known. There are no unknown variables. The better player, who makes the more intelligent moves, always wins. There is no luck involved. Life and poker are not like chess. Sometimes the best decisions do not lead to positive outcomes. I think that Annie’s goal is to help us avoid loss aversion, help us focus on wise decision-making, and not rely solely on the outcome to evaluate if a decision was wise or foolish. Evaluate based on the process, not the outcome.


In chapter two, Annie argues that all decisions are bets. Every decision that we make, large or small, is a bet. I agree. When evaluating decisions, we need to consider the consequences of making the bet and also the consequences of not making the bet. Furthermore, consider positive and negative consequences to each scenario.


As humans, our decisions are based on our belief systems. Our belief systems define how we view the world. Over time, we evolve and adjust our belief systems to more accurately align with the events that we observe. Something that I didn’t know, but should have been able to reason out, is that we tend to believe what we hear. We hear something and immediately assume it is true. Only after the claim gets challenged, do we then make an effort to vet it.


The process that we think we follow for vetting claims:

  1. I hear something.

  2. I vet it.

  3. I decide to believe if it is true or false.

The process that we actually follow for vetting claims:

  1. I hear something.

  2. I believe it is true.

  3. I vet it.

I’ve noticed this pattern from my past experiences. And I’ve vented my frustrations in “It’s 2020: Why is Skim Milk Still a Thing?” about how lazy people are, because they readily accept any statement that aligns with their belief system, and they do not take the initiative to investigate claims. For example, people readily accept fake news. For example, people believe that the referees in a football game are not arbitrating the game fairly. For example, people do not investigate scientific literature to draw their own conclusions. People blindly believe what they are told, accepting the claims that support their own beliefs and rejecting the claims that pose opposition. When somebody says, “Do you want to bet on it?” we are forced to vet our currently held belief system and vet our claim. This is good practice. Do you believe that statement enough to bet on it? What are the chances that it is true? Your confidence in a claim and your belief system is not 100%. There is scale of confidence intervals, ranging from white to gray to black. Saying that you are 40% or 85% confident in your belief demonstrates that you are open to feedback, you are open to alternative belief systems, and you are trying to vet your own belief system.


Self-serving bias is our tendency to attribute successes to skill and to blame failures on bad luck. Self-serving bias can be summarized by the following quote: “If it weren’t for bad luck, I would win every time.” This bias creates a faulty perception of the world, but because it displays confidence it is useful for attracting a mate.


The top people in every field have something in common; they are able to provide positive self-criticism. They evaluate their actions, identify mistakes, identify areas for improvement, and get things done. Top performers admit when they are wrong, they seek to improve even when they win, and they have an uncanny ability to adjust their belief systems in response to inadequacies. The process of adjusting your belief system requires significant effort since it opposes the self-serving bias. High achieving poker players dissect every aspect of the game afterwards. They search for places that they did well and for places that they did poorly, regardless of the outcome. They do the same type of analysis with their opponents. Where did they perform well, what wise decisions did they make, what mistakes did they make? Leave out no detail; it’s all relevant. Be abundantly descriptive, because that is how you’ll learn. Assume that your opponent has a strategy that you are not familiar with, or that your opponent knows something that you don’t. When you assume that there is something to learn, then your mind is open to truth-seeking.


There is a great image of a ship sailing across the ocean. At the start of the journey, if you are off by one degree with your navigation, it will not be noticeable. However, at the end of the journey, the one degree mistake will compound into many miles. The “small” mistake will result in a “large” error. Life is the same. Small adjustments accumulate over time into significant results, even though they are difficult to notice at first.


Get opposing opinions that question your beliefs. If you are liberal, then hire a conservative co-worker. Instead of seeking opposing belief systems, we tend to do the opposite, gravitating towards like-minded individuals. For seeking truth, we need a variety of viewpoints. The purpose of an accountability group is to gather those dissenting viewpoints. Over time and with practice, you will be able to fabricate dissentions on your own, without the need to rely on other people. But this is a learned skill that takes time. Personally, do I do this? I like to think that I can. But that answer might be a self-serving bias. Do Christians surround themselves with opposing religious perspectives? Do they seek opposing perceptions of the world, and do they seek dissentions? No. I think that is why so much of the world opposes the Christian community. We have a belief system that we refuse to challenge. Most of us do not seek truth. We stay where it is comfortable, in our Christian bubbles, surrounded by like-minded individuals. Do I have the answer to every issue raised against Christianity? No. But, I feel like I’ve questioned its truths enough to firmly accept its validity. Although I have fully embraced Christ’s truths, I will continue to seek dissenting viewpoints, because I want to strengthen my belief system.


Note that the process of challenging your belief system is not appropriate for all situations. Sometimes, a person simply needs to vent frustrations, and in these scenarios truth-seeking feedback is not welcomed.


When it comes to analyzing situations, Annie’s clients want to assign a 0% or 100% probability to everything. By default, clients view the world in black and white, that is, all or nothing. In reality, there is always a spectrum of gray colors when it comes to making decisions. Assuming a 0%/100% probability is a poor strategy. Instead, we should factor in the information that we know, recognizing that it might be incomplete, and make a decision accordingly. I think this stood out to me, because I had a recent conversation about the probability of a loved person catching COVID. My opposition wanted to assume that the transmission probability was 50%, either yes or no (i.e., black or white). I argued that we can make a better prediction of the probability of COVID transmission from one person to another, based on what we already know. Between a couple, for example, the probability of transmission is closer to 99% than 50%. Assuming that there is only a 50% chance of being transmitted from one person to another is poor reasoning, and I think that Annie would agree.


Recently, I had another similar conversion, during which my friend was trying to estimate the number of piano instructors in Los Angeles. Clearly, we do not know the exact answer. But we can create reasonable estimates of some important factors, such as the number of people in the city, number of households that own a piano, and the number of students per piano instructor. By making reasonable approximations using known information, we can arrive at the best possible conclusion. For this piano instructor scenario, using the aforementioned approach, my friend arrived at a guess of 150 instructors. Faulty logic would say that the 150 number is arbitrary and no different than 140 or 160. It is faulty to think this, because we know that the total number of piano instructors is not one, and similarly, we know that it is not 100M. Therefore, we already know that here are reasonable and unreasonable answers. It is not a black and white guess. It’s a gray-scale number, and the shades of gray between 150 and 160 are not visible to our poorly perceptive eyes. Our eyes cannot see everything; we are missing information. However, we know that there is a spectrum from black to white, with many shades of grey in between, because we know that there is a noticeable difference between 1 and 150 instructors, and similarly a noticeable different between 150 and 100M instructors. This same logic is applicable to the COVID transmission discussion and Annie’s poker decisions.


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