Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts

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Author: Annie Duke
Publisher: Portfolio
Published: 5/7/2019
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Book Summary - Thinking in Bets by Annie Duke

Key Insights

Tactics for successful living are often compared to the game of Chess. In her book, Thinking in Bets, Annie Duke outlines how the best strategies for making good decisions actually come from the game of Poker. Duke is a professional Poker player and uses her expertise to explain these strategies and how to apply them in daily living. Thinking in Bets is ultimately a blueprint for identifying decision-making deficiencies and creating a plan to overcome them. It is personal coaching with an original approach.

Key Points

Negative Outcomes are NOT a Reflection of Poor Decisions

Associating negative outcomes with bad decisions can be instinctive. When something doesn’t go the way we expect, it’s common to blame the choices we made. Duke warns not to instantly make such associations. She says the fear and caution that can result may stifle the aggressive, game-changing decisions needed for future successes. One example used in the book is how the Seahawks lost to the Patriots in the Super Bowl. The play used was backed by solid data. According to Duke, it was the ever-present element of luck, not poor decision making that led to the loss.

Uncertainty is NOT Bad, and Being Wrong isn’t Either

It is built into our culture to believe that not knowing something is bad. In education, if we don’t know the answers on a test, it is considered a failure. To progress towards good decision making, we need to acknowledge and even embrace uncertainty. This keeps us from viewing everything in black and white. According to Duke, bets aren’t right or wrong based solely on the outcome. She points out that decision making improves when we don’t view past choices as “wrong” but as periods of learning. By redefining wrong as lessons instead of mistakes, we free ourselves from the fear of getting a bad result and are able to move towards more educated risk-taking.

Skill AND Luck Influence the Outcome of Every Bet

Winning Poker players are comfortable with uncertainty. They can place their bets without a great deal of evidence to rationalize the outcome. The ability to make impromptu decisions and live with them is an important skill. Accepting the existence of LUCK is required to play the game successfully. Knowing that you can’t predict most things will help you accept the fundamental truth that life is uncertain. Accepting this truth allows decision making to improve. Interestingly, we feel the pain of losses twice as much as the joy of wins, and in life, or Poker, we will actually be wrong more often than we will be right, setting ourselves up for unnecessary pain.

Most Often, We Bet AGAINST Ourselves

While this may sound negative, betting against ourselves simply means that we aren’t hedging our wagers against someone else. Its other versions of ourselves that we are rejecting. This is because every bet is gambling on a potential future. While one future will win, other future scenarios will lose. The problem we run into is that we tend to favor our present self at the expense of a more successful future one. Instant gratification and impulsive tendencies are called “temporal discounting.” Recognizing such inclinations help us maintain the right frame of mind when making decisions (i.e. placing bets).

OBSERVATION can Affect Luck

Successful Poker players actually watch more than they play. Skilled players will sit out 80% of the hands dealt with them, but use that time productively by watching others as they play. This can cost very little, only each hand’s ante. When making life decisions, we risk money, time, even our well-being. Watching others make decisions, however, can cost us nothing, yet comes with education and perspectives which lead to better luck.

The 10-10-10 Approach

To ensure we can favor our future selves, Suzy Welch’s 10-10-10 strategy is recommended. With this approach, consider how the bet/decision you are about to make will affect you in the next 10 minutes, 10 months, and 10 years.

Our BELIEFS have Everything to Do with the Risks We Take

Research shows that instead of changing our beliefs to accommodate new data, we most often alter our interpretation of information to fit our belief systems. In this way, our existing beliefs affect the way we experience the world. This information processing pattern is called “motivated reasoning.” Ironically, the smarter you are, the better you can be at creating a narrative that supports your beliefs instead of questioning them. An intelligent person can expertly use their brainpower to frame data to fit their perspective, leaving a kind of “blind spot bias,” and the smarter you are, the more heightened that bias can become.

Gain OBJECTIVITY by Forming a “Decision Group”

A circle of friends who will give you honest advice about your life choices can be essential in eliminating blind spot bias. Because it’s not easy to overcome your limiting beliefs, having people around who can help steer around them can help you be more objective. She calls this your “Decision Group.” Duke explains how she became a world-class Poker player and credits it to the quality of those who tutored her. Her circle of Poker friends didn’t curse their losses or celebrate their wins. Instead, they analyzed how they could have played better. She says they could be ruthless in their self-analysis and welcomed truthful critique from each other. They also gave Duke the real truth that she needed to improve her “luck.”

Duke calls this circle of friends an adult version of “the buddy system.” These are people looking out for you, helping you avoid pitfalls. These buddies commit to “truth above feelings” although she admits it's best that discussions center on work strategy and decisions rather than personal life.

Recognize When You are on TILT

A Poker term Duke teaches in her book is, “tilt.” This is when your emotions are running so high, you aren’t making sound decisions. When someone is playing pinball and gets mad at the machine by shaking it, the machine will light up, set off an alarm, and end the game. This is “tilt” and the same thing can happen when we become too emotionally driven. In this state, we are more likely to make bad decisions. Parts of our brain can essentially go on “tilt” which causes the cognitive control center to stop functioning. This most often happens as a response to negative outcomes, but a “winner’s tilt” also exists, when a series of positive outcomes trigger an equally powerful emotional reaction that impairs clear thinking.

Prevent IRRATIONAL Behavior with a “Ulysses Contract”

In The Odyssey, the hero, Ulysses, anticipates sailing past the island of the Sirens. All seamen know the singing is so enchanting, they can’t resist. But ships who steer towards the Siren’s island will crash on the rocks and drown. Ulysses wants to hear the singing of the Sirens but knows the danger, so he has his men tie him to the mast and plug their ears with wax. Ulysses goes mad with desire for the Sirens, but is strapped down and can’t move. Since the men can’t hear the singing, they sail past the island with no danger.

Duke presents the idea of a “Ulysses Contract,” which is a mental buffer to stop irrational behavior. It is a “barrier-inducing” commitment to yourself. In this contract, predetermine what you will and won’t do. For example, decide ahead of time that you won’t eat sugar, so when it is offered, you have the ability to reject what you don’t want in your life, or your body.

The LONG VIEW on Choices Leads to Rational and Productive Decisions

Simply stated, the long view is asking yourself if the choices you are about to make will influence your long-range happiness. This may require stepping back, recognizing when emotions are taking over, and having techniques for dealing with them, such as breathing, meditating, walking, or participating in an activity that clears your mind.

The Main Takeaway: ALL Decisions are Bets

Ultimately, every choice we make is a bet. With each decision, we put our resources at risk, such as energy, money, or other essentials to life. When we understand the nature of our choices and what strategies can help us make the best decisions, we step up our game and have the greatest hope for happiness and success. Understanding the strategies outlined in Thinking in Bets gives readers the confidence to assume risks and accept the outcomes with less negativity and more open-mindedness. Such a mental state will ensure you keep the upper hand.

About the Author

Annie Duke has won more than $4 million along with multiple professional Poker championships. She is the only woman to win the WSOP Tournament of Champions as well as the NBC National Heads-Up Poker Championship. Duke has written a number of books including a series of instructional books for Poker players and an autobiography, How I Raised, Folded, Bluffed, Flirted, Cursed, and Won Millions at the World Series of Poker. Annie Duke is also a corporate speaker and consultant addressing the topic of decision-making strategies.


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