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Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts by Annie Duke

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What makes a decision great is not that it has a great outcome. A great decision is the result of a good process, and that process must include an attempt to accurately represent our own state of knowledge.

Long shots hit some of the time. Blaming the odds makers or the odds themselves assumes that once something happens, it was bound to have happened.  This is a common error when we look at things in hindsight, it doesn’t necessarily mean there was inaccuracy about the probabilities before that single outcome or that people who didn’t see it coming are wrong.

One of the reasons we don’t naturally think of decisions as bets is because we get hung up on the zero-sum nature of the betting. In gambling we visualise someone’s loss or gain usually in a zero sum game.  Life is unlike poker as there is no clear reminder that your decisions have an impact. Poker players are good at managing uncertainty as don’t know opponents cards and think about the probabilities of them holding various hands. 

In most of our decisions, we are not betting against another person. Rather, we are betting against all the future versions of ourselves that we are not choosing. We are constantly deciding among alternative futures by selecting particular activities to undertake. 

We think we form beliefs by:

  1. We hear something.
  2. We think about it and vet it, determining whether it is true or false only after that;
  3. We form our belief.

It turns out, though, that we actually form abstract beliefs this way:

  1. We hear something
  2. We believe it to be true or false
  3. Only sometimes, later, if we have the time or the inclination, we think about it and vet it, determining whether it is, in fact, true or false.

So, in general we form beliefs based on some information we read and don’t vet or update this information. Truth-seeking is the desire to know the truth regardless of whether the truth aligns with the beliefs we currently hold and is not how we tend to process information. We might think of ourselves as open-minded and capable of updating our beliefs based on new information, the book cites research that suggests this is not the case. Instead of altering our beliefs to fit new information, we do the opposite, altering our interpretation of that information to fit our beliefs. This process is referred to as motivated reasoning and being smarter actually makes this worse as you are able to construct a better narrative to support your belief! 

We do not simply ‘react to’ a situation – we behave according to what we bring to the situation. Our beliefs affect how we process all new things.

The solution and philosophy of living the book suggests is to train yourself to view the world through the lens of “Wanna bet?”

This helps us 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%. This helps you objectively assess how certain we are of this “fact” triggering you to engage in assessing and vetting the facts.

The process of thinking about decisions like betting money means you will examine information in a less biased way, be more honest with yourself. You will then be more open to updating and calibrating our beliefs. The more objective we are, the more accurate our beliefs become. In the long run the person who wins bets is the one with the more accurate beliefs.

Consider scoring things between 0 and 10 rather than that assessing things in as zero-sum (also known as binary way) such as confident or not confident.  In your mind it is easier to adapt saying, “I was 57% but now I’m 42%.” This is easier that changing your mind completely I was right, now I am wrong.  Changing your score doesn’t go against your own narrative of being a knowledgeable, educated, intelligent person who holds quality opinions.

The book mentions the film The Matrix and seeing the truth to outline how decisions in life are usually not as clear cut.

In the moment, to help your reasoning take a short trip into the future and try not to be caught up in frustrations of the present. Think towards ways to improve things that you can control.

With some important decisions you can think about yourself discussing this with past and future versions of yourself, essentially debate this, a form of mental time travel.  These ‘meetings’ can lead to better decisions as at the moment of the decision you know you will be accountability to that group. This thought process may remind us to stay on a more rational path.

The 10-10-10 process starts with a question. – what are the consequences of each of my options in ten minutes? In ten months? In ​ten years?” This can help you take perspective. We want to create opportunities to take the broader perspective prior to making decisions which tend to be driven by the magnified feelings we have in the moment.

Suggests we would be better off thinking about our happiness for the long term. We would do well to view our happiness through a wide-angle lens, striving for a long, sustaining upward trend. 

What has happened in the recent past drives our emotional response much more than how we are doing overall.

Mentions Sirens’ song – a legend in which the song would make them steer their boat towards the boat and crash. Odysseus told his crew to tie his hands to the mast and fill their ears with beeswax as they approached the island so they could then steer safely, unaffected by the song they could not hear. This leads to the saying of a Ulysses contract which is a deliberately planned barrier to help us avoid various temptations. 

Scenario planning helps us think about things that may occur in future and how we would act. Some people are uncomfortable with this type of planning due to it making uncertainty prominent. The fact is everything is uncertain.

Think about what outcome you want, then assess this from a negative view point. This will help you plan to overcome barriers that may stop you from achieving your desired outcome.  Also at times put regret in front of your decision to assist deeper thought.

To visualise decisions think of branches of trees being chopped off close to the trunk, once off people disregard that and the further branches that may have come to this. When you have put thought into possible future scenarios try to not forget what could have happened.

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