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A bet is a decision about an uncertain future. Perhaps we futurists could learn something from those who make a living placing bets: professional poker players. My former student Tim Murphy suggested I read Annie Duke’s Thinking in Bets as relevant to our Advanced Strategies class. He correctly bet that I would find it useful!
Duke’s core assumption is that: “there are exactly two things that determine how our lives turn out: the quality of our decisions and luck…And “learning to recognize the difference between the two is what thinking in bets is all about.”
One of the main flaws in our decision-making is what she calls “resulting:” confusing the quality of the decision with the quality of the outcome. In short, sometimes we make high-quality decisions that result in poor outcomes. Yet we label it as a bad decision. She used an example near and dear to me as a New England Patriots football Fan. In the Super Bowl a few years ago, the Seattle coach Pete Carroll called for a pass play at the end of the game that resulted in an interception and New England won. He was nearly universally ridiculed for making the worst decision in the history of sports. What Duke points out that it was actually a pretty good decision that unfortunately turned out poorly. The odds of the interception were tiny, roughly 2%, but in this case it happened. That doesn’t make it a bad decision. She observes that professional poker players play the odds and avoid resulting…or they don’t last very long on the professional circuit.
She notes the human tendency to maintain a tight link between decisions and outcomes, but that is not true in complex and uncertain situations. Some music for our futurist ears: “The secret is to make peace with walking around in a world where we recognize that we are not sure and that’s okay.” As we futurists know, uncertainty and ambiguity is the norm, but most people don’t like it and try to convince themselves that the world is more certain than it really is. Poker players know that there is a great deal of uncertainty in any poker game. They understand that even the best hand can lose.
So what make for good bets? “Our bets are only as good as our beliefs. Part of the skill in life, whether poker or foresight, comes from learning to be a better belief calibrators, using experience and information to more objectively update our beliefs to more accurately represent the world. In short, the more accurate our beliefs, the better the foundation of the bets we make. And when our money is at stake, we tend to be more willing to challenge our beliefs.
She brings in some external research to develop this point: our default is to believe that what we hear and read is true. Instead of altering our beliefs to fit new information, we do the opposite, altering our interpretation of that information to fit our beliefs. We are wired to protect our beliefs even when our goal is to truthseek. Good poker players are constantly replaying hands with others and questioning their decisions to see if they could have played it differently or better.
A key takeaway is that they are super-disciplined about making the best possible decision, and not overly swayed by whether they win or lose particular hands.
My advice based on this book – let’s play some poker (and become better futurists). – Andy Hines
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