Summary & Takeaways
Taking things from beliefs to bets can really change our perspectives. It forces us to consider the probabilities involved for particular outcomes.
We should focus on our decision making processes, not the results since the results can be due to luck. It is the combination of high quality decision making process and luck that determines our outcome in life.
Considering the opposing viewpoint and encouraging dissent can make our decision making better. By inviting opposing viewpoints, we can get a more realistic picture and avoid some of the more common human cognitive biases.
Thinking about how things can go wrong and preparing for those scenarios can help us anticipate if things don’t turn out the way we hoped or thought.
Notes & Quotes
What a bet really is and what determines the quality of our lives
“Those world-class poker players taught me to understand what a bet really is: a decision about an uncertain future.”
“The quality of our lives is the sum of decision quality plus luck.”
What determines the outcome of a decision
“Thinking in bets starts with recognizing that there are exactly two things that determine how our lives turn out: the quality of our decisions and luck.”
Execution is more important than talent
“Solving the problem of how to execute is even more important than innate talent to succeed in poker. All the talent in the world won’t matter if a player can’t execute; avoiding common decision traps, learning from results in a rational way, and keeping emotions out of the process as much as possible.”
Chess is not a real game
“Chess is not a game. Chess is a well-defined form of computation. You may not be able to work out the answers, but in theory there must be a solution, a right procedure in any position. Now, real games...are not like that at all. Real life is not like that. Real life consists of bluffing, of little tactics of deception, of asking yourself what is the other man going to think I mean to do. And that is what games are about in my theory.”
Challenge of incomplete information
“Incomplete information poses a challenge not just for split-second decision making, but also for learning from past decisions.”
Results can deceive us
“We make this mistake when we look for lessons in life’s results. Our lives are too short to collect enough data from our own experience to make it easy to dig down into decision quality from the small set of results we experience.”
Be comfortable saying “I don’t know”
“But getting comfortable with “I’m not sure” is a vital step to being a better decision maker.”
Being aware of our ignorance leads to progress
“Thoroughly conscious ignorance is the prelude to every real advance in science.”
Good decisions should come from good process
“A great decision is the result of a good process, and that process must include an attempt to accurately represent our own state of knowledge.”
Decisions aren’t ‘right’ or ‘wrong’ based on only their results
“Decisions are bets on the future, and they aren’t ‘right’ or ‘wrong’ based on whether they turn out well on any particular iteration.”
Search for opportunities, not just money
“Will the new job have better opportunities for advancement and future gains, independent of short-term gains in compensation?”
Our decisions in life are always bets
“No matter how far we get from the familiarity of betting at a poker table or in a casino, our decisions are always bets.”
Consider opportunity costs
“There is always opportunity cost in choosing one path over others.”
Choosing something is a bet against everything else that we could’ve done
“We are betting against all the future versions of ourselves that we are not choosing.”
The role of belief in our lives
“We bet based on what we believe about the world.”
“Part of the skill in life comes from learning to be a better belief calibrator, using experience and information to more objectively update our beliefs to more accurately represent the world. The more accurate our beliefs, the better the foundation of the bets we make. There is also skill in identifying when our thinking patterns might lead us astray, no matter what our beliefs are, and in developing strategies to work with (and sometimes around) those thinking patterns.”
“Whether it is a football game, a protest, or just about anything else, our pre-existing beliefs influence the way we experience the world.”
We have trouble doubting
“People are credulous creatures who find it very easy to believe and very difficult to doubt.”
How to overcome first impression bias
“Even though our default is ‘true’, if we were good at updating our beliefs on new information, our haphazard belief-formation process might cause relatively few problems.”
Why we struggle with disagreement
“Information that disagrees with us is an assault on our self-narrative.”
The value of turning positions and beliefs into bets
“When someone challenges us to bet on a belief, signaling their confidence that our belief is inaccurate in some way, ideally it triggers us to vet the belief, taking an inventory of the evidence that informed us.”
“Wanna bet? Triggers us to engage in that third step that we only sometimes get to. Being asked if we are willing to bet money on it makes it much more likely that we will examine our information in a less biased way, be more honest with ourselves about how sure we are of our beliefs, and be more open to updating and calibrating our beliefs.”
“Offering a wager brings the risk out in the open.”
Recognize learning opportunities when they are in front of you
“More accurately, because he ignored lots of feedback that his strategy was a losing one. He eventually went broke because he didn’t recognize learning opportunities as they arose.”
Expertise is more than experience
“The answer is that while experience is necessary to becoming an expert, it’s not sufficient.”
Most of poker is watching how others play
“An experienced player will choose to play only about 20% of the hands they are dealt, forfeiting the other 80% of the hands before even getting past the first round of betting. That means about 80% of the time is spent just watching other people play.”
The variance in happiness comes from comparing ourselves to others
“What accounts for most of the variance in happiness is how we’re doing comparatively.”
How to change a habit
“To change a habit, you must keep the old cue, and deliver the old reward, but insert a new routine.”
Extreme positions make you vulnerable
“It’s easy to win a bet against someone who takes extreme positions.”
Learning compounds
“The benefits of recognizing just a few extra learning opportunities compound over time.”
Aim for accuracy in groups
“Groups can improve the thinking of individual decision-makers when the individuals are accountable to a group whose interest is in accuracy.”
You win bets by better understanding the world
“We don’t win bets by being in love with our own ideas. We win bets by relentlessly striving to calibrate our beliefs and predictions about the future to more accurately represent the world.”
We crave approval from others
“It’s great to get approval from people we respect, but we crave approval so badly, we’ll still work to get it from a stranger.”
Ways to encourage dissent in an organization
“The State Department, since the Vietnam War, has had a formal Dissent Channel, where employees can have their dissenting views heard and addressed without fear of penalty. The American Foreign Service Association, the professional organization of foreign-service employees, has four separate awards it gives annually to members “to recognize and encourage constructive dissent and risk-taking in the Foreign Service.”
“Red teams...are dedicated to arguing against the intelligence community’s conventional wisdom and sporting flaws in logic and analysis.”
How judges keep diversity in opinions
“Appellate court panels are composed of three judges randomly drawn from that circuit’s pool.”
Note: could use a similar idea in business: 3 random people from the company and outside the company if needed
Even a single dissenter can make a difference
“A single panelist from the other party had ‘a large disciplining effect’.”
Overcome confirmation bias with diversity
“Nobody has found a way to eradicate confirmation bias in individuals, but we can diversify the field to the point to where individual viewpoint biases begin to cancel out each other.”
Don’t dismiss ideas because of their source
“Don’t disparage or ignore an idea just because you don’t like who or where it came from.”
Evaluate decision making before knowing the outcome
“The best way to do this is to deconstruct decisions before an outcome is known.”
Hold off letting others know your opinion before they’ve voiced theirs
“So when trying to vet some piece of information, some fact or opinion, we would do well to shield our listeners from what our opinion is as we seek the group’s opinion.”
De-bias opinions by encouraging dissent
“Another way a group can de-bias members is to reward them for skill in debating opposing points of view and finding merit in opposing positions.”
People tend to move towards the middle after debating their ideas
“What I’ve generally found is that two people whose positions on an issue are far apart will move toward the middle after a debate or skilled explanation of the opposing position.”
Anonymous dissent channels
“Likewise, companies can implement an anonymous dissent channel, giving any employee, from the mail room to the boardroom, a venue to express dissenting opinions, alternative strategies, novel ideas, and points of view that may disagree with the prevailing viewpoint of the company without fear of repercussions.”
Seek out how you might be wrong
“When seeking advice, we can ask specific questions to encourage the other person to figure out reasons why we might be wrong.”
People are more open to dissent if you lead with assent
“Lead with assent. For example, listen for the things you agree with, state those and be specific, and the follow with ‘and’ instead of ‘but’...they will be more open and less defensive if we start with those areas of agreement.
When we lead with assent, our listeners will be more open to any dissent that might follow…’And’ is an offer to contribute. ‘But’ is a denial and repudiation of what came before.”
Note: similar advice to that which is given in the Dale Carnegie’s book How to Win Friends and Influence People
Improving decision quality is about improving our chances of good outcomes
“Improving decision quality is about increasing our chances of good outcomes, not guaranteeing them.”
Good things can compound
“Good results compound. Good processes become habits, and make possible future calibration and improvement.”
It’s about the journey
“It doesn’t so much matter where we end up as how we got there. What has happened in the recent past drives our emotional response much more than how we are doing overall.”
Preparation is key
“The Normandy landings still succeeded, though, because they prepared for as many potential scenarios as possible.”
Experts are better planners
“Just as great poker players and chess players (and experts in any field) excel by planning further into the future than others, our decision making improves when we can more vividly imagine the future.”
Imagining how we might fail can help us succeed
“All those reasons why we didn’t achieve our goal help us anticipate potential obstacles and improve our likelihood of succeeding.”
“Once we recognize the things that can go wrong, we can protect against the bad outcomes, prepare plans of action, enable nimble responses to a wider range of future developments, and assimilate a negative reaction in advance so we aren’t so surprised by it or reactive to it.”