[[Logical Thinking]], [[Decision Making]] # Thinking in Bets Author: [[Annie Duke]] ## Summary - Life is inherently uncertain which makes a probabilistic thinking process important for decision making. ^95a7df - Don't confuse outcome with process. You can have a good process with a bad outcome and vice versa. - Humans' belief formation is based on repetition and we don't often know where our beliefs come from. Once we have a belief we rarely challenge it and seek out confirmatory evidence. Being confronted with a bet forces us to challenge our belief. - Thinking in terms of uncertainty also allows us to say we don't know the answer. - We can use outcomes as feedback to update our beliefs or to improve our decision making process. Understanding how much of an outcome can be attributed to skill and how much to luck is difficult because we often don't have enough information. There is the added problem of our ingrained desire to attribute good outcomes to skill and bad outcomes to luck. - Smart people more easily fool themselves with more complex narratives rather than thinking objectively. - If we want to become better decision makers we need to change our habits from patting ourselves on the shoulder when something goes our way, to feeling good about identifying the good and bad in our decision process and pat ourselves on the shoulder for becoming a better thinker. - Look for people with alternative viewpoints to challenge your beliefs and thinking. Find a group which has the mutual understanding of challenging each others biases for the purpose of self-improvement. Viewpoints need to be diverse and there needs to be few barriers to dissent, but still a respectful attitude. When using a group to improve decision making, you need to be transparent about information including your mistakes or contradictory information. - Positive and negative emotion can distort our decision making process and decision making can vary under different circumstances. Use tricks to improve your decision making process such as: - start with the ideal future, and work back to understand how you got there. - the Ulysses contract - impose constraints on your actions before being tempted to do the wrong thing. - Contribute to a decision swear jar when you catch yourself deviating from a good thinking process - Perform pre-mortems on a decision by imagining what went wrong, and asking why. People who imagine failures are more likely to succeed. - Simulate different future scenarios and put regret before the decision. ## Review The book is filled with important lessons that are conveyed through easy to understand anecdotes. The ideas are not revolutionary and can be found in many other books on decision making. However, given that the book is short, its worth skimming through from time to time to remind oneself of the key ideas for good probabilistic decision making. One criticism I have is that it assumes that probabilities in life are at least somewhat knowable (like in poker). For many decisions you could argue its impossible to know, and that would require a different decision framework.