Thinking in Bets–Making Smarter Decisions

As an avid poker player, when a friend told me about this book it was a no-brainer read for me. But, I was already reading three books at the time and didn’t want to add another into the rotation. So I turned to Audible, and listened to this one in my car. Learning lessons from playing poker at the highest levels, Annie Duke zeroes in on many psychological elements essential to getting better at the game. She then extrapolates these lessons to everyday life and our decision making. There are many life lessons that I have personally learned from poker, such as patience, making decisions with incomplete information, and sometimes choosing the best option when all options are less than ideal. Hearing Duke discuss one of these different aspects reinforced some of these subconscious lessons.

Duke highlights an important bias that can hinder us, and that is to associate the outcome of a decision with the decision itself and then let the outcome influence future decisions. In poker, this would be known as result oriented decision making. Say I have the second best possible starting hand in poker–pocket kings, and before the flop someone goes all in and I decide to call, risking all my chips. Before the flop is dealt, the other player flips over the best starting hand in poker–pocket aces. Instantly, I know my odds of winning are about 20%, meaning over the long run I will win 1 out of 5 times or put another way, I’m fucked. The flop, turn, and river, are dealt and my hand does not improve. I have a pair of kings, he has a pair of aces, he wins. The result is that I lost, but does that mean I made a bad decision? The answer is probably not. I had to manage the risk that he had aces, it was a possibility but not a probability. He could have had queens, jacks, ace king, ace queen, or a number of even worse hands. Against all those hands I am the clear favorite, but it would be easy for me to get upset and say to myself “I should have known! I should have just folded if I had folded I would have kept my money.” If he had pocket queens and I called with pocket kings and won, I would’ve rewarded myself for the great decision I made. In both scenarios, I made a good decision, but the outcome was different. Duke shows how in the real world, when things are even more convoluted, we tend to embrace result oriented thinking much more. She uses an example of when the Seahawks decided to throw the ball on the 1 yard line of the Super Bowl, with little time left, instead of letting a highly successful running back try and run the ball in. After the Patriots intercepted the ball off, everyone talked about what a bad decision coach Carroll made and how that bad decision naturally led to a bad outcome. Duke inspects Carroll’s decision making process using logic, rather than hindsight bias like many sports fans and news outlets did. She came to the conclusion that it was actually a good decision to throw the ball, but Carroll just got a bad outcome.

Detecting the mental biases we have is difficult, it’s much easier to take comfort in the misery of the “unlucky outcome” rather than in our bad decision making. Blaming misfortune on luck, rather than on our decision making makes us complacent and unable to learn from our mistakes and make better decisions in the future. This book takes somewhat complicated psychological traits we all have–explained in more detail in Thinking Fast and Slow and The Black Swan–and presents them in a manner that is extremely readable. I’d recommend this book to anyone who want to become a better decision maker, even if you do not play poker.