From Annie Duke’s book “Thinking in Bets“
To make better decisions, make a bet or pretend you are making a bet.
- ““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. The more objective we are, the more accurate our beliefs become. And the person who wins bets over the long run is the one with the more accurate beliefs.” (p. 66)
- “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. The more objective we are, the more accurate our beliefs become. And the person who wins bets over the long run is the one with the more accurate beliefs.” (p. 66)
- “Expecting everyone starting to throw the gauntlet down, challenging each other to bet on any opinion, is impractical if you aren’t hanging out in a poker room. (Even in poker rooms, this generally happens only among players who know each other well.) I imagine that if you went around challenging everyone with “Wanna bet?” it would be difficult to make friends and you’d lose the ones you have. But that doesn’t mean we can’t change the framework for ourselves in the way we think about our decisions. We can train ourselves to view the world through the lens of “Wanna bet?” Once we start doing that, we are more likely to recognize that there is always a degree of uncertainty, that we are generally less sure than we thought we were, that practically nothing is black and white, 0% or 100%. And that’s a pretty good philosophy for living.” (p. 66)
- “Imagine taking part in a conversation with a friend about the movie Citizen Kane. Best film of all time, introduced a bunch of new techniques by which directors could contribute to storytelling. “Obviously, it won the best-picture Oscar,” you gush, as part of a list of superlatives the film unquestionably deserves. Then your friend says, “Wanna bet?” Suddenly, you’re not so sure. That challenge puts you on your heels, causing you to back off your declaration and question the belief that you just declared with such assurance. 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.” (p. 64)
- “Offering a wager brings the risk out in the open, making explicit what is already implicit (and frequently overlooked). The more we recognize that we are betting on our beliefs (with our happiness, attention, health, money, time, or some other limited resource), the more we are likely to temper our statements, getting closer to the truth as we acknowledge the risk inherent in what we believe.” (p. 66)
When you express a belief, give a probability.
- “We would be better served as communicators and decision-makers if we thought less about whether we are confident in our beliefs and more about how confident we are. Instead of thinking of confidence as all-or-nothing (“I’m confident” or “I’m not confident”), our expression of our confidence would then capture all the shades of grey in between.” (p. 68)
- “When we express our beliefs (to others or just to ourselves as part of our internal decision-making dialogue), they don’t generally come with qualifications. What if, in addition to expressing what we believe, we also rated our level of confidence about the accuracy of our belief on a scale of zero to ten? Zero would mean we are certain a belief is not true. Ten would mean we are certain that our belief is true. A zero-to-ten scale translates directly to percentages. If you think the belief rates a three, that means you are 30% sure the belief is accurate. A nine means you are 90% sure.” (p. 68)
“So instead of saying to ourselves, “Citizen Kane won the Oscar for best picture,” we would say, “I think Citizen Kane won the Oscar for best picture but I’m only a six on that.” Or “I’m 60% that Citizen Kane won the Oscar for best picture.” That means your level of certainty is such that 40% of the time it will turn out that Citizen Kane did not win the best-picture Oscar.” (p. 68) - “Forcing ourselves to express how sure we are of our beliefs brings to plain sight the probabilistic nature of those beliefs, that what we believe is almost never 100% or 0% accurate but, rather, somewhere in between.” (p. 68)
- “In a similar vein, the number can reflect several different kinds of uncertainty. “I’m 60% confident that Citizen Kane won best picture” reflects that our knowledge of this past event is incomplete. “I’m 60% confident the flight from Chicago will be late” incorporates a mix of our incomplete knowledge and the inherent uncertainty in predicting the future (e.g., the weather might intervene or there might be an unforeseen mechanical issue).” (p. 69)
- “When confronted with new evidence, it is a very different narrative to say, “I was 58% but now I’m 46%.” That doesn’t feel nearly as bad as “I thought I was right but now I’m wrong.” Our narrative of being a knowledgeable, educated, intelligent person who holds quality opinions isn’t compromised when we use new information to calibrate our beliefs, compared with having to make a full-on reversal. This shifts us away from treating information that disagrees with us as a threat, as something we have to defend against, making us better able to truthseek.” (p. 70)
How can you vet your own opinion before making a bet?
Annie Duke recommends using this checklist before giving an opinion or bet:
- How do I know this?
- Where did I get this information?
- Who did I get it from?
- What is the quality of my sources?
- How much do I trust them?
- How up to date is my information?
- How much information do I have that is relevant to the belief?
- What other things like this have I been confident about that turned out not to be true?
- What are the other plausible alternatives?
- What do I know about the person challenging my belief?
- What is their view of how credible my opinion is?
- What do they know that I don’t know?
- What is their level of expertise?
- What am I missing? (p. 65)
Why does thinking in bets improve accuracy?
- “To be sure, thinking in bets is not a miracle cure. Thinking in bets won’t make self-serving bias disappear or motivated reasoning vanish into thin air. But it will make those things better. And a little bit better is all we need to transform our lives. If we field just a few extra outcomes more accurately, if we catch just a few extra learning opportunities, it will make a huge difference in what we learn, when we learn, and how much we learn.” (p. 115)
- “Once we start doing that, we are more likely to recognize that there is always a degree of uncertainty, that we are generally less sure than we thought we were, that practically nothing is black and white, 0% or 100%. And that’s a pretty good philosophy for living.” (p. 67)
- “Thinking in bets triggers a more open-minded exploration of alternative hypotheses, of reasons supporting conclusions opposite to the routine of self-serving bias. We are more likely to explore the opposite side of an argument more often and more seriously—and that will move us closer to the truth of the matter.” (p. 112)
- “By treating decisions as bets, poker players explicitly recognize that they are deciding on alternative futures, each with benefits and risks. They also recognize there are no simple answers. Some things are unknown or unknowable. The promise of this book is that if we follow the example of poker players by making explicit that our decisions are bets, we can make better decisions and anticipate (and take protective measures) when irrationality is likely to keep us from acting in our best interest.” (p. 43)
Other good quotes:
“I imagine that if you went around challenging everyone with “Wanna bet?” it would be difficult to make friends and you’d lose the ones you have. But that doesn’t mean we can’t change the framework for ourselves in the way we think about our decisions. We can train ourselves to view the world through the lens of “Wanna bet?” (p. 67)
“Despite the difficulties, striving for accuracy through probabilistic thinking is a worthwhile routine to pursue. For one thing, it won’t always be so difficult. We have to start doing this with deliberation and effort, but it eventually becomes a habit of mind.” (p. 115)
“When scientists publish results of experiments, they share with the rest of their community their methods of gathering and analyzing the data, the data itself, and their confidence in that data. That makes it possible for others to assess the quality of the information being presented, systematized through peer review before publication. Confidence in the results is expressed through both p-values, the probability one would expect to get the result that was actually observed (akin to declaring your confidence on a scale of zero to ten), and confidence intervals (akin to declaring ranges of plausible alternatives).”
“Scientists, by institutionalizing the expression of uncertainty, invite their community to share relevant information and to test and challenge the results and explanations. The information that gets shared back might confirm, disconfirm, or refine published hypotheses. The goal is to advance knowledge rather than affirm what we already believe. This is why science advances at a fast clip.*”
“By communicating our own uncertainty when sharing beliefs with others, we are inviting the people in our lives to act like scientists with us. This advances our beliefs at a faster clip because we miss out on fewer opportunities to get new information, information that would help us to calibrate the beliefs we have.” (p. 72)
“thinking in bets will improve decision-making throughout our lives. We can get better at separating outcome quality from decision quality, discover the power of saying, “I’m not sure,” learn strategies to map out the future, become less reactive decision-makers, build and sustain pods of fellow truthseekers to improve our decision process, and recruit our past and future selves to make fewer emotional decisions.”
“it’s about acknowledging that we’re already making a prediction about the future every time we make a decision, so we’re better off if we make that explicit. If we’re worried about guessing, we’re already guessing. We are already guessing that the decision we execute will result in the highest likelihood of a good outcome given the options we have available to us. By at least trying to assign probabilities, we will naturally move away from the default of 0% or 100%,(p. 210)
“Incomplete information and factors outside of our control make all our investment choices uncertain. We evaluate what we can, figure out what we think will maximize our investment money, and execute. Deciding not to invest or not to sell a stock, likewise, is a bet. These are the same decisions I make during a hand of poker: fold, check, call, bet, or raise.” (p. 45)
“What good poker players and good decision-makers have in common is their comfort with the world being an uncertain and unpredictable place. They understand that they can almost never know exactly how something will turn out. They embrace that uncertainty and, instead of focusing on being sure, they try to figure out how unsure they are, making their best guess at the chances that different outcomes will occur.“