Bookworm: Thinking in Bets

‘The duchess of poker’ Annie Duke teaches us how to make smarter decisions when we don’t have all the facts.

So this is a book about gambling

No, it’s about decision-making. Although its author, Annie Duke, is known as ‘the duchess of poker’ (and draws on this expertise), she also describes herself as a decision strategist.

What is her theory?

We need to accept that we never really know what the outcome of a decision is going to be. We’re always dealing with probability, Duke reminds us. Nothing is really ‘right or wrong’ because most of the time these judgements can only be made after the fact.

As soon as we embrace the fact that what we are essentially doing is akin to gambling (where risk and probability is everything), it helps.

How does it help?

Even if we don’t actually place down any money as a bet, the phraseology of betting makes us do our best to ensure that our beliefs and decisions are grounded in some kind of truth.

We are less likely, in other words, to double down and ignore conflicting information in the hope that we are correct. We try to find evidence; we prove that the decision is as air-tight as it can be.

But gambling’s about luck, really, isn’t it?

Not entirely; there’s is a good deal of skill involved in a game such as poker. Duke explains that learning from our mistakes is only really possible if we look back at them and work out what was down to us and what was down to circumstances outside of our control.

Knowing which of our skills led to a positive outcome will help us reproduce success; but appreciating that a certain result was achieved only through luck will give us the self-awareness not to rely too heavily on it again – because probability might not be on our side next time.

Does this apply to group decisions?

Yes, in fact, this kind of thinking is easier within a group – if it’s the right collection of people. Finding people who will challenge us and our ‘conventional wisdom’ is particularly insightful.

Examining our decisions on our own is always going to be fraught with bias and shortcuts; it’s always harder to hold ourselves accountable. But under the guidance of a group, we may be able to remain more objective.

What if I’m indecisive and keep replaying what might go wrong?

There are benefits in this – as long as we do eventually make a decision. Duke cites research showing that people who imagine potential obstacles are, in fact, more likely to achieve their outcomes.

The better we can imagine the future, the better we can prepare for it. This doesn’t mean assuming that we’ll fail or being certain we’ll succeed; it’s just about envisioning an outcome and rewinding to work out how it was achieved.

What am I most likely to say after reading this book?

“What’s the probability of this working out?”

What am I least likely to say after reading this book?

“I’m sticking with my gut on this.”