Thinking in Bets

Preview

Most of us like to think we are making decisions from logic, from facts, from a clear view of the world as it really is. But that is not what is happening most of the time. We are guessing, predicting, interpreting, hoping, fearing, remembering badly, and then telling ourselves a neat story about why our choice made sense. The big idea at the heart of this book is simple and powerful. Life is much closer to poker than chess. In chess, all the pieces are visible. If you lose, it is because you made a bad move. In poker, you can make a great decision and still lose because the hidden cards and the turn of the next card matter. You can also make a terrible decision and win anyway. Once you really take that in, a lot changes. That is the mindset Annie Duke wants to give you. She is not just talking about poker tables and big bluffs in smoky rooms. She is talking about everyday life, about choosing a job, hiring someone, starting a business, ending a relationship, investing money, trusting your gut, and learning from what happens next. The problem is that we usually judge decisions by outcomes. If things turn out well, we call the decision smart. If things turn out badly, we call it foolish. But outcomes are a messy mix of skill and luck. If we do not separate those two, we never really learn. We just chase results, flatter ourselves when we get lucky, and punish ourselves when variance goes against us. The book invites you to think in bets. That means treating beliefs as probabilities instead of certainties. It means saying, I could be wrong, and being glad to find out when you are. It means understanding that every decision is...