Annie Duke on Thinking in Bets, Part 2

In her book, Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts, Annie Duke draws on examples from business, sports, politics, and poker to share tools anyone can use to embrace uncertainty and make better decisions.

These are some of my favorite quotes and takeaways from reading the book.

“All decisions are bets”

All bets involve elements such as choice, probability, and risks. Our decisions are bets because we routinely decide among alternatives, put resources at risk, and assess the likelihood of different outcomes. When we choose something, we always incur the opportunity cost of not going with something else.

“Most bets are bets against ourselves”

In most of our decisions, we are betting against all the future versions of ourselves that we are not choosing. When we decide, we bet that one of those future versions of ourselves will yield the most value. Of course, these future versions have not happened yet, so that is where the risk is. If we can recognize the uncertainty and become more comfortable with it by making it explicit, we stand to see the world more accurately.

“Our bets are only as good as our beliefs”

It turns out that our beliefs are the biggest driver for the bets we make. Beliefs that are disconnected from reality can influence and drive our bets off course with the desired result. Fortunately, this also means that part of life’s skill comes from learning to be a better belief calibrator. We can leverage experience and information to more objectively update our beliefs and improve our bets or decisions.

“Hearing is believing”

We need to have a reliable approach to validate or to update our beliefs. We find ourselves in one mental prison to believe something but never bother to validate it. We also tend to alter our interpretation of information to fit or to confirm our beliefs. We need to adopt a “truthseeking” stance where we practice the discipline of investigating the truth regardless of whether the fact aligns with the beliefs we currently hold.