Name: Thinking in Bets
ISBN: 9780735216358

Annie Duke

Even the best decision doesn't yield the best outcome every time: there's always an element of luck that you can't control, and there is always information that is hidden from view. Duke shows readers how to think in bets: How sure am I? What are the possible ways things could turn out? As a former World Series of Poker champion turned business consultant, she draws on examples from business, sports, politics, and (of course) poker to share tools anyone can use to embrace uncertainty and make better decisions.

Making Smarter Decisions when You Don't Have All the Facts

Thinking in Bets

Heiki Riesenkampf

The book covered a lot of biases we have (along the lines of Thinking Fast and Slow) and how to go around them. Some parts felt familiar, some parts were also new concepts. Also a good level of theory vs anecdotal evidence.

Morgan Holland

Excellent, clear overview of how to apply probabalistic thinking to all parts of your life, and why you should

Danté

** spoiler alert **
           This is a great book. It really drives home the distinction between good & bad decisions versus good & bad outcomes. The metaphor of our probabilistic universe being a tree with the present acting as chainsaw for the branches of alternate futures that didn't happen was vivid and is something I'll remember for a long time.

Key takeaways 
- distinguish between good/bad decisions vs good/bad outcomes.
- spectrum of certainty rather than binary wrong/right (also indicates nuanced confidence and demonstrates your thinking).
- all decisions are actually bets using resources like our own time/effort.
- life is like one long poker game. Life & happiness as a long-term stock holding: don't keep watching the ticker.
- "backcasting" from positive future plus doing a "premortem" on negative future (like principle of inversion) to act as own red team
- probabilistic universe being a tree with the present acting as chainsaw for the branches of alternate futures that didn't happen



My Highlights:
 Hindsight bias is the tendency, after an outcome is known, to see the outcome as having been inevitable.

It sounded like a bad result, not a bad decision. The imperfect relationship between results and decision quality devastated the CEO and adversely affected subsequent decisions regarding the company. The CEO had identified the decision as a mistake solely because it didn’t work out. He obviously felt a lot of anguish and regret because of the decision. 

When we think probabilistically, we are less likely to use adverse results alone as proof that we made a decision error, because we recognize the possibility that the decision might have been good but luck and/or incomplete information (and a sample size of one) intervened.

Redefining wrong allows us to let go of all the anguish that comes from getting a bad result. But it also means we must redefine “right.” If we aren’t wrong just because things didn’t work out, then we aren’t right just because things turned out well. Do we win emotionally to making that mindset trade-off? Being right feels really good. “I was right,” “I knew it,” “I told you so”—those are all things that we say, and they all feel very good to us. Should we be willing to give up the good feeling of “right” to get rid of the anguish of “wrong”? Yes.

In most of our decisions, we are not betting against another person. Rather, we are betting against all the future versions of ourselves that we are not choosing. We are constantly deciding among alternative futures: one where we go to the movies, one where we go bowling, one where we stay home.

“Wanna bet?” Offering a wager brings the risk out in the open, making explicit what is already implicit (and frequently overlooked). The more we recognize that we are betting on our beliefs (with our happiness, attention, health, money, time, or some other limited resource), the more we are likely to temper our statements, getting closer to the truth as we acknowledge the risk inherent in what we believe.

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.” Our narrative of being a knowledgeable, educated, intelligent person who holds quality opinions isn’t compromised when we use new information to calibrate our beliefs, compared with having to make a full-on reversal.

If one person expresses a belief as absolutely true, and someone else expresses a belief by saying, “I believe this to be true, and I’m 80% on it,” who are you more likely to believe?

By saying, “I’m 80%” and thereby communicating we aren’t sure, we open the door for others to tell us what they know.

Aldous Huxley recognized, “Experience is not what happens to a man; it is what a man does with what happens to him.”

...the difference between how we field our own outcomes versus others’ outcomes to get closer to the objective truth. We know we tend to discount the success of our peers and place responsibility firmly on their shoulders for their failures. A good strategy for figuring out which way to bet would be to imagine if that outcome had happened to us. If a competitor closes a big sale, we know about our tendency to discount their skill. But if we imagine that we had been the one who closed the sale, we are more likely to find the things to give them credit for, that they did well and that we can learn from.

Certainly, in exchange for losing the fear of taking blame for bad outcomes, you also lose the unadulterated high of claiming good outcomes were 100% skill. That’s a trade you should take. Remember, losing feels about twice as bad as winning feels good; being wrong feels about twice as bad as being right feels good. We are in a better place when we don’t have to live at the edges. Euphoria or misery, with no choices in between, is not a very self-compassionate way to live.

Giving that up is not the easiest choice. Living in the matrix is comfortable. So is the natural way we process information to protect our self-image in the moment. By choosing to exit the matrix, we are asserting that striving for a more objective representation of the world, even if it is uncomfortable at times, will make us happier and more successful in the long run.

The benefits of recognizing just a few extra learning opportunities compound over time.

We win bets by relentlessly striving to calibrate our beliefs and predictions about the future to more accurately represent the world.

A predetermined loss limit acts as a check against irrationally chasing losses, but self-enforcement is a problem. If you have more money in your pocket, you might still take it out.

Dissent channels and red teams are a beautiful implementation of Mill’s bedrock principle that we can’t know the truth of a matter without hearing the other side.

Companies implementing prediction markets to test decisions include Google, Microsoft, General Electric, Eli Lilly, Pfizer, and Siemens. People are more willing to offer their opinion when the goal is to win a bet rather than get along with people in a room. Accuracy, accountability, and diversity wrapped into a group’s charter all contribute to better decision-making, especially if the group promotes thinking in bets.

Be a data sharer. That’s what experts do. In fact, that’s one of the reasons experts become experts. They understand that sharing data is the best way to move toward accuracy because it extracts insight from your listeners of the highest fidelity.

If the group is blind to the outcome, it produces higher fidelity evaluation of decision quality. The best way to do this is to deconstruct decisions before an outcome is known.

Skepticism is about approaching the world by asking why things might not be true rather than why they are true.

Thinking in bets demands the imperative of skepticism. Without embracing uncertainty, we can’t rationally bet on our beliefs. And we need to be particularly skeptical of information that agrees with us because we know that we are biased to just accept and applaud confirming evidence.

...we know from the first chart, the big picture, that all those minute-to-minute and even day-to-day changes had little effect on the investment’s general upward trajectory. Our problem is that we’re ticker watchers of our own lives. Happiness (however we individually define it) is not best measured by looking at the ticker, zooming in and magnifying moment-by-moment or day-by-day movements.

happiness as a long-term stock holding. We would do well to view our happiness through a wide-angle lens, striving for a long, sustaining upward trend in our happiness stock...

At the very beginning of my poker career, I heard an aphorism from some of the legends of the profession: “It’s all just one long poker game.” That aphorism is a reminder to take the long view, especially when something big happened in the last half hour, or the previous hand—or when we get a flat tire. Once we learn specific ways to recruit past and future versions of us to remind ourselves of this, we can keep the most recent upticks and downticks in their proper perspective. When we take the long view, we’re going to think in a more rational way.

The swear jar is a simple example of a Ulysses contract in action: we think ahead to a hazard in our decision-making future and devise a plan of action around that, or at least commit that we will take a moment to recognize we are veering away from truthseeking.

Chinese proverb, “A journey of a thousand miles starts with a single step”? Turns out, if we were contemplating a thousand-mile walk, we’d be better off imagining ourselves looking back from the destination and figuring how we got there.

In backcasting, we imagine we’ve already achieved a positive outcome, holding up a newspaper with the headline “We Achieved Our Goal!” Then we think about how we got there.

A premortem is an investigation into something awful, but before it happens.

Backcasting and premortems complement each other. Backcasting imagines a positive future; a premortem imagines a negative future. We can’t create a complete picture without representing both the positive space and the negative space.

we are more likely to execute on those goals if we think about the negative futures. We start a premortem by imagining why we failed to reach our goal:

Conducting a premortem creates a path to act as our own red team. Once we frame the exercise as “Okay, we failed. Why did we fail?” that frees everyone to identify potential points of failure they otherwise might not see or might not bring up for fear of being viewed as a naysayer.

Remember, the likelihood of positive and negative futures must add up to 100%. The positive space of backcasting and the negative space of a premortem still have to fit in a finite amount of space. When we see how much negative space there really is, we shrink down the positive space to a size that more accurately reflects reality and less reflects our naturally optimistic nature.

at the time the foreman ordered the workers to remove tools from the tunnel, he concluded, “The verdict appears to be a consequence of hindsight bias—the human tendency to believe that whatever happened was bound to happen, and that everyone must have known it. If [the foreman] believed that an explosion was imminent, then he is a monster; but of that there is no evidence. Hindsight bias is not enough to support a verdict.”

Because they led to a negative result, however, the CEO had been consumed with regret. When he looked back at his decisions, he couldn’t see all those branches and their likelihoods. He could only see the trunk. All he saw was a bad result. The CEO removed all those other branches with a chainsaw and ran them through a wood-chipper. They disappeared and he acted as if they never existed. That’s what hindsight bias is, and we’re all running amok through the forest with a chainsaw once we get an outcome. Once something occurs, we no longer think of it as probabilistic—or as ever having been probabilistic. This is how we get into the frame of mind where we say, “I should have known” or “I told you so.” This is where unproductive regret comes from.

Life, like poker, is one long game, and there are going to be a lot of losses, even after making the best possible bets. We are going to do better, and be happier, if we start by recognizing that we’ll never be sure of the future. That changes our task from trying to be right every time, an impossible job, to navigating our way through the uncertainty by calibrating our beliefs to move toward, little by little, a more accurate and objective representation of the world. With strategic foresight and perspective, that’s manageable work. If we keep learning and calibrating, we might even get good at it.

Wall Street Journal bestseller! Poker champion turned business consultant Annie Duke teaches you how to get comfortable with uncertainty and make better decisions as a result. In Super Bowl XLIX, Seahawks coach Pete Carroll made one of the most controversial calls in football history: With 26 seconds remaining, and trailing by four at the Patriots' one-yard line, he called for a pass instead of a hand off to his star running back. The pass was intercepted and the Seahawks lost. Critics called it the dumbest play in history. But was the call really that bad? Or did Carroll actually make a great move that was ruined by bad luck? Even the best decision doesn't yield the best outcome every time. There's always an element of luck that you can't control, and there is always information that is hidden from view. So the key to long-term success (and avoiding worrying yourself to death) is to think in bets: How sure am I? What are the possible ways things could turn out? What decision has the highest odds of success? Did I land in the unlucky 10% on the strategy that works 90% of the time? Or is my success attributable to dumb luck rather than great decision making? Annie Duke, a former World Series of Poker champion turned business consultant, draws on examples from business, sports, politics, and (of course) poker to share tools anyone can use to embrace uncertainty and make better decisions. For most people, it's difficult to say "I'm not sure" in a world that values and, even, rewards the appearance of certainty. But professional poker players are comfortable with the fact that great decisions don't always lead to great outcomes and bad decisions don't always lead to bad outcomes. By shifting your thinking from a need for certainty to a goal of accurately assessing what you know and what you don't, you'll be less vulnerable to reactive emotions, knee-jerk biases, and destructive habits in your decision making. You'll become more confident, calm, compassionate and successful in the long run.

Making Smarter Decisions When You Don't Have All the Facts

Wojciech Waśniewski

I liked the ideas in the book. I should have enjoyed the book in general - but I didn't, and I honestly don't know why. I found myself skipping and skimming a lot of sections.
Still, the core premise of the book is great!

Ugis

Good read about the probabilistic approach of outcomes in life. Our thinking needs to be adjusted to be more objective and clear if we want to win the bets about our life. As always with similar books, the whole idea could have been explained shorter. [reading time: 9h9m]

Poker champion turned business consultant Annie Duke teaches you how to get comfortable with uncertainty and make better decisions as a result. In Super Bowl XLIX, Seahawks coach Pete Carroll made one of the most controversial calls in football history: With 26 seconds remaining, and trailing by four at the Patriots' one-yard line, he called for a pass instead of a hand off to his star running back. The pass was intercepted and the Seahawks lost. Critics called it the dumbest play in history. But was the call really that bad? Or did Carroll actually make a great move that was ruined by bad luck? Even the best decision doesn't yield the best outcome every time. There's always an element of luck that you can't control, and there is always information that is hidden from view. So the key to long-term success (and avoiding worrying yourself to death) is to think in bets: How sure am I? What are the possible ways things could turn out? What decision has the highest odds of success? Did I land in the unlucky 10% on the strategy that works 90% of the time? Or is my success attributable to dumb luck rather than great decision making? Annie Duke, a former World Series of Poker champion turned business consultant, draws on examples from business, sports, politics, and (of course) poker to share tools anyone can use to embrace uncertainty and make better decisions. For most people, it's difficult to say "I'm not sure" in a world that values and, even, rewards the appearance of certainty. But professional poker players are comfortable with the fact that great decisions don't always lead to great outcomes and bad decisions don't always lead to bad outcomes. By shifting your thinking from a need for certainty to a goal of accurately assessing what you know and what you don't, you'll be less vulnerable to reactive emotions, knee-jerk biases, and destructive habits in your decision making. You'll become more confident, calm, compassionate and successful in the long run.

Omar

This book was surprisingly good. I expected it to be shallow or very poker focused, given the author's background, however, it was a lot more applicable and relatable than expected. 

The key takeaway I got from this is, establish plans to deal with uncertainty, rather than try to deny or control it. 

Specific notes I took at various times: 
* Resulting is judging the quality of a decision retroactively based on the outcome. That is, saying "I should have known that" when in reality, it wasn't something that would have been expected given the known facts at the time. Related to hindsight bias.

* Use a group to keep yourself in check and analyze decisions without resulting. A group of people committed to evaluated the quality of decisions, using facts known, instead of quality of results or without letting results bias their input is crucial. Consider discussing situations without letting the group know the result even if known and get feedback BEFORE revealing the result. 

* Use premortems as a way to increase the likelihood of achieving a goal. A premortem is, in essence, proactively imagining all the ways in which your outcome may NOT materialize as you want. Then assessing likelihood and working to improve your odds. It makes you much more realistic and avoids common planning pitfalls of being too optimistic and ignoring key concern areas.

Luke Kanies

This book was great.

I’d recommend everyone read it, because it gives you a new way of thinking about problems you face all the time, and a useful language for talking about that new framing.

Not all problems should be viewed in terms of bets, but many are made more tractable and less emotional when looked at that way.

The book is also well written, with a great combination of personal stories, clear advice, and solid context to put it all together.

Ivaylo Durmonski

It all comes down to this: the ability to figure out the chain of events a decision will trigger and then find a solution to all possible outcomes. All this done before actually making the decision.

Or in other words, consider all possible futures. That’s the proper way to make a decision. The proper way to make a bet.

Annie Duke, a professional poker player, argues that we’re all betting. We’re all betting on a possible future when we’re making a decision.

The book offers some unique ways to look at your decision-making process. A way to distinguish luck from skill and focus on improving the latter.

A book about bets from a professional poker player about decision-making?

Yes, I was too skeptical at first. But the book doesn’t fail to deliver.

It’s a light read with a ton of tactics that will help you make better bets so you can improve your future.

My key takeaway:

The world is not black and white. Even if a certain result is bad, this doesn’t mean that the decision was 100% wrong. There are nuances. Filtering the right from wrong will help you spot exactly what part didn’t work out so you can better calibrate your thinking.

Full summary:
https://durmonski.com/book-summaries/...

Thinking in Bets Making Smarter Decisions when You Don't Have All the Facts