“Thinking in bets” is the book by Annie Duke a professional poker player. The exercise of decision making under conditions of uncertainty aligns with the game of Poker where you make decisions under conditions of uncertainty.
High quality decisions are like investments in life.
View every decision as a bet and you become more open minded.
“Are you certain you will enjoy the book?” – some-one wants to bet with you that you won’t. You then begin to challenge your beliefs, what information do I need or what am I missing? What does this person know about the book that I don’t?
Suddenly you are more open minded as you have so much more information about the book, favourable and unfavourable. You have lost your bias and you have made yourself more open to new information.
This approach to decisions, beginning to look at them like bets, means we embrace objectivity and we make better decisions.
Duke’s other principle is to think about expected value. Calculate the expected reward and the outcome. Is it worth watching the film for 2 hours or meeting a friend for coffee for 1 hour and then exercising for the other hour. Think about the time, money and attention and committ with confidence if the expected value works for you at that moment in time. Assess your decision by how much you are investing Vs expected value.
We get better decisions if we evaluate their success and their failure. We could make a terrible decision and get good results by being lucky. However if we have just haphazardly got lucky this would not be a good pattern to follow.
We should evaluate the positive and the negative, so if you make a decision and get a good result, think what two mistakes you made. This creates the mindset of process focused rather than results focused.
“What makes a decision great is not that it has a great outcome. A great decision is the result of a good process” Annie Duke
We are making decisions in uncertain times so what can we apply from Duke’s theory:-
- Make a decision imagining it is a bet – ignore your bias and be open minded
- Weigh up the expected value with how much time or money you are investing
- Evaluate all decisions – it is the process not the result