This is a comprehensive summary of the book Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts by Annie Duke. Covering the key ideas and proposing practical ways for achieving what’s mentioned in the text. Written by book fanatic and online librarian Ivaylo Durmonski. Supporting Members get full access.
In Thinking in Bets, the author, Annie Duke, holder of a World Series of Poker gold bracelet, takes us on a journey that starts inside smoke-filled rooms full of high-stakes. But the book is not about gambling or about winning a national championship – absolutely not. It’s about making decisions. About approaching decisions as bets so you can more accurately predict the future, become a rational thinker, and, eventually, create a better future for yourself.
The Core Idea:
By using the poker table as a lab, Annie Duke realized that the two most important factors determining how our lives will turn out are the following: the quality of our decisions and luck. When you adequately recognize the difference between the two, you’ll begin to handle uncertainty more accurately. A decision, in the book, is explained as nothing more than betting on a possible future.
- A bad result doesn’t necessarily mean a bad decision.
- Looking for certainty in an uncertain world can be soul-crushing. Your decisions are simply bets.
- Don’t focus on the outcome. Concentrate your attention on the decision-making process.
6 Key Lessons from Thinking in Bets:
- Lesson #1: We Evaluate The Quality of a Decision Based on The Result
- Lesson #2: We Search for Certainty in an Uncertain World
- Lesson #3: Decisions are Never Only Right and Only Wrong
- Lesson #4: We’re Always Betting On a Possible Future
- Lesson #5: Experience is Not Enough to Get Better
- Lesson #6: Encourage Dissent to Create an Objective Decision-Making Group
Lesson #1: We Evaluate The Quality of a Decision Based on The Result
We are terrible at separating luck from skill. We create a strong connection between the results and the quality of our decisions. Never successfully identifying the patterns – when the result is bad – that are far beyond our control.
This type of thinking in poker is called “resulting”. It means that we label decisions as bad only because the outcome wasn’t successful.
In theory, blaming the decision sounds like the right thing to do. After all, if things didn’t turn out as we anticipated, it’s logical to turn things around and point the finger at the person making the decision – you.
When we use this patter of evaluation, however, we fail to understand something important. That oftentimes, our decision-making process was good enough. Simply the “play”, in the words of the author, didn’t work out as we hoped.
After all, there are a lot of things that can go wrong in life. Blaming yourself if things didn’t work out is not a smart move. The best move is to observe your process when deciding – and search for gaps there. If there aren’t any, you simply got unlucky. And understanding the difference between luck and skill is of major importance.
Take a moment to imagine your best decision in the last year. Now take a moment to imagine your worst decision. I’m willing to bet that your best decision preceded a good result and the worst decision preceded a bad result.” Annie Duke
Lesson #2: We Search for Certainty in an Uncertain World
We assume causation when there is only a correlation.
What does this mean?
We tend to adjust the evidence we collect from the world to fit our narrative. We use this to create order and feel good about our decision and eventually about ourselves.
And why do we do it?
Because this way of thinking kept us alive.
It’s way better to run when you hear a noise in the forest rather than to “check” what’s in the bush. After all, if there is a wild beast you won’t live long enough to warn your tribe members.
But this type of thinking is not sufficient for our sophisticated world. It was enough to get us out of the jungle alive and help us evolve but not enough to help us create the future we so desperately desire.
What can be done then?
Well, we can’t change how our brains operate. Searching for certainty in an uncertain world is deeply rooted in our brains and trying to alter this internal logic is a waste of time.
Instead, we can accept that many things in our lives are unpredictable. Uncertainty is part of the world we live in and putting the world in order is impossible. We need to allow in our brains the following concept: that things might not work out the way we want them to, even if we do our best.
We are uncomfortable with the idea that luck plays a significant role in our lives. We recognize the existence of luck, but we resist the idea that, despite our best efforts, things might not work out the way we want. It feels better for us to imagine the world as an orderly place, where randomness does not wreak havoc and things are perfectly predictable. We evolved to see the world that way. Creating order out of chaos has been necessary for our survival.” Annie Duke
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