What do poker and business strategy have in common? More than you may think. Many people refer to life and all its challenges as being like a game of chess, but that is a flawed analogy. In chess, nothing is random. Every element of the game is public knowledge. Poker is part skill, part luck. In a world where we never have complete information in any decision we have to make, how are we supposed to be confident about any of our choices?
Author Annie Duke assures us that we can make the best decisions possible with all the information we can gather…and still have a bad outcome. Conversely we can make decisions that ought to be terrible for us and come out just fine through luck. The human mind wants to make sense of everything and find order even where there may be none. As a species we don’t like the idea of circumstances being out of our control. There is no stopping the forces of random chance, though.
Thinking in Bets gives us a fascinating look into how flawed our logic can be in regards to probability in decision making in games, in life, and in business. The book also hammers home the idea that just because we make a bet and lose doesn’t mean we should change our behavior the next time we’re up for a similar decision.
Every choice we make is a bet. Sometimes we’re betting actual money, but other things can be on the line as well and may not be so obvious. It’s important to consider opportunity costs, future stability of options that may seem good now, our own happiness, and most compellingly, all our future selves that immediately disappear once we walk through the door of choice.
An excellent bit of advice: When collecting data for a big bet don’t just take into account the things you know that you know. Take into account all the things you are absolutely sure that you don’t know.
This is a must-read for anyone who finds themselves nervous in anticipation of high stakes decisions. There is also a ton of value to be found in Thinking in Bets for improving all the decisions we make even on a mundane day to day basis.