Book Summary – Thinking in Bets (Making Smarter Decisions When You Don’t Have All the Facts)

Humans crave order and control. Duke explains that people don’t like to admit that something wholly irrational and uncontrollable might shape their destinies. Early humans had to link stimuli with outcomes to survive. A bush rustling in the forest might foretell a hidden carnivore ready to jump. Humans evolved to seek the comfort of certainty. People always want to know that certain stimuli mean certain results. Unfortunately, Duke notes, the world doesn’t work that way. Successful poker players are comfortable with uncertainty and with making choices without rational evidence of the likely outcomes. In poker, Duke asserts, talent counts for less than the ability to make “in-the-moment” choices and live with them.

When you make a decision, Duke explains, you “bet on the future.” What happens after you make that choice isn’t the only determinant of whether your choice was perfect or flawed. Maybe you had to select from among a group of flawed alternatives. Maybe you invested in a “long shot” because the reward seemed worth the risk. Maybe you thought you knew all you should know about the circumstances of your choice, but something crucial remained hidden. Maybe your choice should have worked out, Duke says, but as is always possible your luck turned bad.

Chess

Duke describes chess as unlike poker and unlike real life. Life requires “bluffs” and figuring out what someone else wants or intends in the present. Duke considers chess “computational” – each action produces a clear, wholly rational result. Chess decisions, unlike poker or life decisions, never get made in the face of “incomplete information.” When you try to make chess decisions about life – or poker – Duke believes you likely fall into the trap of “black-or-white thinking,” a world of either-or choices. Such one or the other choices deny the uncertainty of the world, the uncertainty of the human decision-making processes and the uncertainty of the role of luck.

To make more productive decisions, Duke urges you to embrace saying, “I’m not sure.” When you understand that you cannot know most things, Duke explains, it helps you see and accept the world and life and poker as they are: fundamentally uncertain. When you stop thinking of every outcome as either right or wrong, and accept the “continuum” that runs between those “extremes,” your decision making will improve considerably.

Duke cites research suggesting that you feel the pain of losing or being wrong twice as much as you feel the joy of wining or being right. But, she notes, you will be wrong in life – and in poker – more often than you will be right. If you base your self-esteem on always winning or being correct, you set yourself up for unnecessary pain.

Poker players, Duke reports, understand that each decision in a game is a choice between “alternative futures.”  Each of those futures offers differing advantages and dangers. Any choice in life is a bet.  For some choices, the aspects of betting – options, likelihood, jeopardy, and the like – are more apparent. Dealing with stocks, for examples, makes these aspects stand out.

Forming Beliefs

Duke observes that people seldom let facts get in the way of forming their beliefs.  They use a simple process. They “hear something,” they think it’s true, and maybe at some remote date, they actually consider the notion and search out evidence to support it. Most likely, though, they don’t. But, Duke suggests, if you have to bet on something you believe to be true, your process changes. You will ask: Where did I hear this, and from what source? Is that source valid? Is what I know current? What else did I believe that is similar to this belief and proved to be untrue? What does the person asking me to bet know that I might not know? What don’t I know?

If you apply these or similar questions to the new notions you encounter, Duke advises, you will become smarter about every decision you make. Listening to the “opposite” argument of what you believe enables you to gain a clearer view of the whole picture and the likely truth.

Their Luck, Your Skill

Poker players, Duke says, watch more than they play. Knowledgeable players will sit out 80% of the hands dealt to them. But they use that 80% of hands productively: They watch other players. Observing the outcomes of other people’s choices is educational. And for poker players, observing comes at no cost except each hand’s ante. When you make a life choice, Duke believes, you always risk something, be it cash, time, well-being or contentment. Watching others make a choice costs you nothing.

Oddly, though, when watching others choose, Duke says that people remain as prone to all-or-nothing thinking as they are about their own choices. While people tend to blame their own less-than-perfect outcomes on poor luck, they regard everyone else’s poor outcomes as totally their own fault. People see their own good outcomes as a product of their skill in making decisions; they regard other people’s happy outcomes as pure luck.

A close examination of anyone’s choices will reveal a constant truth that emerges as Duke’s main theme: No outcome results from 100% luck or 100% skill. Believing in other people’s luck, she argues, keeps people from accurately measuring their own skill and determination. It also prevents them from developing compassion for anyone in difficult circumstances. If you can achieve a healthy perspective, your happiness will spring from your own outcomes no matter what outcomes others achieve.

“Decision Pod”

Moving toward a more objective view of the world and your place in it is not easy. Developing those insights alone is hard. To do so, Duke explains that you have to seek out the truth about yourself and about the beliefs you hold. Not everybody wants to know the truth. Fewer still want to seek it.

Annie Duke considers herself fortunate: She learned to play poker because she met a number of “world-class players” who helped her. These players didn’t sit around bemoaning their losses or celebrating their victories. After an important match, they would talk in depth about the hands they played badly. They asked one another how they could have played better, how they could have improved their strategies and what mistakes they unknowingly made. They were ruthless in their self-analysis, and they wanted ruthless, truthful analysis from their friends. They provided Duke with that crucial and rare truth.

She suggests that you create a corollary of this helpful group in your life. Think of it as an adult version of the “buddy system” you used in school or at summer camp. You always had another kid with you if you went hiking or swimming, someone who looked out for you and someone you looked after. An adult buddy system is a “decision group” – a small collection of good friends you know will speak honestly with you about your life choices.

This decision pod commits to “truthseeking.” That means being honest even when honesty hurts someone’s feelings. It means not letting people in the pod delude themselves. You can find people for your pod among your friends, family and colleagues or, for a less personal pod, amid a “professional group” of people who work in your field. In such a group, your discussions would center on work strategy and decisions, not around your personal life.

A truthseeking group, Duke maintains, requires a new “social contract.” Under this contract, everyone promises to be “open-minded” when they hear opinions that do not align with their own. They also promise to give credit to those who offer worthy insights and to take responsibility for their actions within the group. At times, taking responsibility might make you uncomfortable, but that’s part of the group dynamic. The members of your decision group will “think in bets” together and help one another evaluate decisions before and after making important choices.

“Tilt”

If you’re playing pinball and get mad at a the machine and give it a good shake – or you want the ball to go in a certain direction, and you push or lift the machine to help the ball along – the pinball machine will light up, make noises and end your game. When this happens, the machine is on tilt.

When negative outcomes drive your emotions to the point that you can’t make sound decisions, Duke reports, poker players say you are on tilt. In this state, you are likely to make a bad choice that will lead to a “bad outcome,” which will lead you to more bad choices and further bad outcomes, in a self-fulfilling, downward spiral. When the parts of your brain responsible for your emotions go on tilt, your limbic system closes down your prefrontal cortex. When you go on tilt, your “cognitive control center” stops functioning. Poker players – and anyone else – might also suffer from “winner’s tilt.” Duke underscores the irony that an unexpected number of good outcomes in a row might trigger a powerful emotional reaction that leads a player to stop thinking clearly.

When you are on tilt, Duke says, you are not “decision fit.” You need to learn to recognize when your emotions have taken over and how to deal with them. You can do deep breathing, meditate, take a walk or engage in any activity that helps your regain “perspective.” One strategy is to ask if the choice you are about to make will have an impact on your long-range happiness. Taking the long view on any choice, Duke believes, usually leads to a more rational, productive decision.

The “Ulysses Contract” 

Duke turns to Homer’s saga of classical antiquity, The Odyssey, and recounts the episode when the hero Ulysses knows he and his men must sail their ship past the island of the Sirens. The Sirens sing so sweetly that no sailor can resist them. Sailors steering their boats toward the Sirens’ island crash on hidden rocks and drown. Ulysses wants to hear the Sirens’ song. He has his men tie him to the mast of their ship and plug up their ears with wax. When Ulysses hears the Sirens, he goes mad with desire to be with them. But he cannot move. His men hear nothing and sail their boat safely past the Sirens’ island.

A Ulysses Contract, Duke explains, is a “barrier” you erect against your own “irrational behavior.” If you fear overeating, for example, you could contract with yourself not to wait for a friend at the food court of a mall, but to wait somewhere else instead. That is a “barrier-inducing” contract. A “barrier-reducing” contract would be to carry healthy snacks with you, so if you have to eat, you will not ingest unhealthy or empty calories. You can apply a Ulysses Contract to many situations, including not betting on a poor hand – in life or in poker.

Sound, Not Profound, Advice

Duke writes with a breezy assertion honed by years of winning at the poker table. She is well-educated, articulate and observant. Though she strains to offer a systematic approach to poker or decision-making, some of her insights and programs seem useful. Her notions of a truthseeking group seem somewhat idealistic. But her warnings about knowing when you are on tilt, her insights into people’s irrational notions about luck and skill, and her advice about stopping to think when you face any important choice are helpful, if not groundbreaking or original. Running through her book is the constant reminder that nothing you do succeeds or fails on luck or skill alone. This is a lesson that appears in academic works, in philosophical treatises, and in other books on poker and decision making – it isn’t new. But Duke’s worthy, relevant education – in college and, especially, at the gambling table – grants her counsel a particular ring of truth.