Thinking in Bets, by Annie Duke

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Annie Duke was a world-class poker player, having won the World Series of Poker as well as other prominent games, who has since shifted to sharing what she learned about decision making at the poker table in talks and workshops. This book is the collection of her wisdom. If you want a summary in another form, I listened to her when Shane Parrish interviewed her on the Farnam Street Blog podcast, and there’s a Talk at Google with her if you prefer video.

In a volatile, uncertain, complex and ambiguous (VUCA) world, whether at a high-stakes poker table or in the business world, we must constantly update our understanding and decision making processes by learning from what we are observing. The challenge is that our brains work against us, due to the dozens of cognitive biases that work to protect us from having to change our minds.

Duke’s suggested solution is to think in bets, treating everything as a probability such that we’re never right or wrong, but just changing our assessment of the probability:

Incorporating uncertainty in the way we think about what we believe creates open-mindedness, moving us closer to a more objective stance toward information that disagrees with us. We are less likely to succumb to motivated reasoning since it feels better to make small adjustments in degrees of certainty instead of having to grossly downgrade from “right” to “wrong”. When confronted with new evidence, it is a very different narrative to say, “I was 58% but now I’m 46%.” That doesn’t feel nearly as bad as “I thought I was right but now I’m wrong.”… This shifts us away from treating information that disagrees with us as a threat, as something we have to defend against, making us better able to truthseek.

Another way in which we can improve our ability to truthseek is to understand how to interpret what happened. One of the challenges for poker players in improving their skill is that the element of luck means they can make good decisions and lose, or make bad decisions and win. If you judge decisions only by what happened (aka “resulting”), then you will not learn as quickly because you will be unable to separate the decision (which you control) from what happened due to luck (which you don’t control). She calls this skill “fielding outcomes”, as in each outcome is like a ball coming in, and you have to classify the outcome as skill or luck after receiving it.

This is obviously a great challenge for humans, as we tend to interpret everything that happens in terms of what makes us feel good; in other words, when a good outcome happens it was clearly due to our great skill, and when a bad outcome happens, it was due to bad luck. Duke suggests that one way to combat this tendency is to form a decision-making group so that you can use the social pressure of the group to keep your instincts from leading you astray. She attributes a portion of her poker-playing success to being included in a group of professional poker players through her brother (Howard Lederer) that quickly taught her these lessons. She has a great quote from one of them, Erik Seidel, in response to her complaining about her bad luck in losing a big hand early in her career:

I don’t want to hear it. I’m not trying to hurt your feelings, but if you have a question about a hand, you can ask me about strategy all day long. I just don’t think there’s much purpose in a poker story if the point is about something you had no control over, like bad luck.

We all need buddies like that to hold us accountable for taking responsibility for what we can control, and for letting go of what we can’t (the luck). Another example is that her brother actually wouldn’t let her talk with him about hands that she lost as she had a tendency to vent about her bad luck; he forced her to talk about the mistakes she made on hands that she had won, so that she could learn to separate winning from making good decisions. When we can field outcomes more skillfully so we understand what we contributed to the outcome vs. what was due to luck, we will learn more quickly to make better decisions.

Her last couple chapters were less interesting for me, perhaps because I’d seen these concepts elsewhere so they felt like more of a slog. One was on the power of dissent in learning to argue the other side, and the value of a devil’s advocate in sharpening our thinking. The other was on the power of mental time travel, thinking as if you were remembering back to today using tools such as Gary Klein’s premortem, and learning to take into account the repercussions of today’s actions on Future You. On that point, I love the way Tim Urban draws “Future Tims” panicking as he procrastinates in preparing his TED talk (scroll down to the stick figure cartoons where there’s a room of “future Tims” who will do all the work; as present Tim keeps goofing off, the last couple “future Tims” get frantic).

I appreciated Duke’s perspective, and the usefulness of poker as a metaphor for life, where decisions come at you constantly and you have only seconds to make high-stakes decisions. Duke’s key insights of thinking in bets/probabilities to get less attached to our view of the world, and to field outcomes so we have a clearer sense of what portion of our results is due to our skill vs. luck provide a nice template to improve our decision making. And yet maintaining that perspective is difficult with people to hold us accountable, as she notes with her advice to find a buddy – anybody want to form a decision-making group?

One thought on “Thinking in Bets, by Annie Duke

  1. Decision making group? Count me in!

    This post also (for me) brings up the notion of the observing mind. We are curious about the decisions we make, but not embedded in them.

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