The key ideas

Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts

Annie Duke, 2018

In the Super Bowl, a coach calls a pass, the ball is intercepted, and the whole country calls the decision stupid. Former professional poker player Annie Duke shows why that verdict is too quick. Her book is about separating the quality of a decision from luck, honestly doubting your own beliefs, and learning from outcomes without fooling yourself.

Who it is for

For anyone who beats themselves up for a long time over a bad choice, who is afraid of getting an important decision wrong, or who wants to learn to tell bad luck from their own mistake.

We take credit for the good and blame the bad on luck, so that the bad is never our fault.

Twenty-six seconds to go

February 2015, the Super Bowl, the final of American football. Seattle trails New England by four points. There are twenty-six seconds left in the game, and the ball sits one yard from the opponent's end zone. Everyone expects coach Pete Carroll to hand the ball to his best running back. Carroll calls a pass. A defender intercepts it, and Seattle loses. The next morning the papers call it one of the worst decisions in Super Bowl history.

Annie Duke saw that play differently. She made her living at poker for twenty years and won more than four million dollars in tournaments, and before that her field was cognitive psychology. By her analysis, an interception in that situation is very rare, and an incomplete pass stops the clock and leaves time for two more tries. The decision was reasonable. The outcome was unlucky.

The whole book grows out of this. Duke calls any decision about a future you can't know for sure a bet. Moving, a job, an investment, a talk with someone close to you: these are bets too. Each one has your choice in it and luck in it, and people mix the two up all the time.

Duke shows how to think in bets: how to separate a decision from its outcome, how to test your own beliefs, how to learn from results, and how to call in other people, and your future self, for help.

The worst decision that was just bad luck

Duke once ran a session with company leaders and asked each of them to name their worst decision of the year. One CEO named firing the president of his company. After that, everything went wrong. Finding a replacement was painful, two people passed through the job, and sales fell.

Duke asked how the decision itself had been made. It turned out the CEO had compared his company with its direct competitors and saw that the president was holding it back. He hired the president a coach, and that didn't help. He thought about splitting the president's duties among other people, but decided it would hurt the team's morale. Only then did he fire him.

To Duke, this sounds like a sensible choice with a bad result. The CEO judged the decision by its outcome. And then the outcome started to seem inevitable to him, though at the moment of choosing nobody knew it. A bad outcome doesn't mean a bad decision, and a good outcome doesn't prove the decision was good.

The danger is that we learn from outcomes. Imagine someone runs a red light and nothing happens. Judge by the result, and it seems fine to keep driving that way.

Read in Livria

About the author

Annie Duke played poker professionally for twenty years and won more than four million dollars in tournaments. Before poker she studied cognitive psychology at the University of Pennsylvania. Today she teaches companies how to make decisions.

All books by this author: Annie Duke

Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts Quiz

Terms from the book

  • Princeton
  • Premortem
  • Super Bowl
  • Merton
  • Carroll
  • Dartmouth
  • Cognitive psychology
  • Seinfeld
  • Interception: In American football, a defender catches a ball the opponent threw to a teammate, and the attack is over.
  • Hennigan: John Hennigan, an American professional poker player known for his love of unusual bets.
  • Des Moines: The capital of Iowa in the American Midwest, a quiet city without the casinos and nightlife poker players are used to.
  • Neumann: John von Neumann, a twentieth-century mathematician and one of the creators of game theory, the science of decisions when interests collide.
  • Gilbert: Daniel Gilbert, a professor of psychology at Harvard University who studies how people form beliefs and predict their own future.
  • Nick the Greek: The nickname of a poker player Duke met early in her career. His example in the book shows how a person can go for years without learning from his own losses.
  • Ivey: Phil Ivey, an American professional poker player and many times winner of major tournaments.
  • Echo chamber: A circle of people who all share the same views and only confirm to each other what they already believe.
  • Welch: Suzy Welch, an American business journalist and the author of the “10-10-10” rule for hard decisions.
  • Tilt: Poker slang for the state after a painful loss, when emotions take over and a player makes decisions in the heat of the moment.
  • Ulysses: The Latin name of Odysseus, the hero of Homer's poem. To resist the song of the Sirens, he had himself tied to the mast.

All terms

Similar books