Thinking in Bets

Duke's central argument is that people judge decisions by how they turned out, what poker players call resulting. She opens with Pete Carroll's widely condemned goal-line pass call in Super Bowl XLIX and argues that it was defensible given the odds. From there she builds a practical system: treat beliefs as bets stated as probabilities, separate skill from luck when reviewing outcomes, and build a small group of truth-seeking peers who challenge each other's reasoning.

Duke won a World Series of Poker bracelet and studied cognitive psychology at the University of Pennsylvania before turning to consulting and writing about decision-making. The book became a bestseller. Reviewing it at Bayesian Spectacles, the psychologist Eric-Jan Wagenmakers gave it four stars out of five while arguing that her image of the present as a chainsaw cutting off branches of possible futures is mostly wrong as a picture of hindsight bias.

Anyone who manages risk, allocates capital or reviews other people's decisions will get a vocabulary and a set of habits for separating process from outcome.

1. Don't grade decisions by results. A good decision can lose and a bad one can win. Reviewing trades or investments by outcome alone teaches the wrong lessons.
2. State beliefs as probabilities. Saying you are 70 percent confident instead of sure makes it easier to change your mind and to compare your calibration over time.
3. Be honest about luck. People credit skill for wins and blame luck for losses. Applying the same test to both is the only way to learn from a track record.
4. Build a truth-seeking group. Agree with a few colleagues to challenge each other's reasoning, reward accuracy over agreement, and judge ideas apart from who proposed them.
5. Precommit before emotions hit. Deciding in advance what you will do in a drawdown or a winning streak, and imagining how a plan could fail, guards against decisions made in the heat of the moment.

After an introduction explaining why this isn't a poker book, six chapters move from diagnosis to tools.

1. Life is poker, not chess. Chess has perfect information and little luck, while real decisions resemble poker. Duke uses the Carroll call to define resulting and hindsight bias.
2. Wanna bet? Asking whether you would bet on a belief exposes how sure you really are, and expressing beliefs as probabilities makes it easier to update them.
3. Bet to learn. She shows how people field outcomes, attributing good results to skill and bad ones to luck, and how to sort the two more honestly.
4. The buddy system. A small group committed to accuracy over comfort can catch errors an individual will not see in themselves.
5. Dissent to win. Drawing on the sociologist Robert Merton's norms for science, she sets rules for groups that reward disagreement and judge ideas apart from their source.
6. Adventures in mental time travel. She offers techniques for linking present choices to future selves, including precommitment devices, imagining a plan's success or failure in advance, and picturing the consequences of a choice at different time horizons.

Wall Street Journal bestseller! Poker champion turned business consultant Annie Duke teaches you how to get comfortable with uncertainty and make better decisions as a result. In Super Bowl XLIX, Seahawks coach Pete Carroll made one of the most controversial calls in football history: With 26 seconds remaining, and trailing by four at the Patriots' one-yard line, he called for a pass instead of a hand off to his star running back. The pass was intercepted and the Seahawks lost. Critics called it the dumbest play in history. But was the call really that bad? Or did Carroll actually make a great move that was ruined by bad luck? Even the best decision doesn't yield the best outcome every time. There's always an element of luck that you can't control, and there is always information that is hidden from view. So the key to long-term success (and avoiding worrying yourself to death) is to think in bets: How sure am I? What are the possible ways things could turn out? What decision has the highest odds of success? Did I land in the unlucky 10% on the strategy that works 90% of the time? Or is my success attributable to dumb luck rather than great decision making? Annie Duke, a former World Series of Poker champion turned business consultant, draws on examples from business, sports, politics, and (of course) poker to share tools anyone can use to embrace uncertainty and make better decisions. For most people, it's difficult to say I'm not sure in a world that values and, even, rewards the appearance of certainty. But professional poker players are comfortable with the fact that great decisions don't always lead to great outcomes and bad decisions don't always lead to bad outcomes. By shifting your thinking from a need for certainty to a goal of accurately assessing what you know and what you don't, you'll be less vulnerable to reactive emotions, knee-jerk biases, and destructive habits in your decision making. You'll become more confident, calm, compassionate and successful in the long run.