Thread by @position_trader

A thread on my notes and learnings from the book "Thinking in Bets" by Alan Duke, a poker champion turned business consultant.

The book deals with how to make better decisions when dealing with uncertainty. (1/n)

Resulting - The tendency to judge the quality of a decision with the quality of its outcome.

Bad result does not equate to bad decision.

Beware of hindsight bias. (2/n)

Life is more poker than chess.

Chess has no hidden information and no luck. The better player wins.

Poker involves uncertainty, risk, luck, deception. The better player may easily lose despite making all the right decisions. (3/n)

""I don't know" is not a failure but a necessary step towards enlightenment."

Learn to accept uncertainty. It is closer to reality than certainty. (4/n)

"All decisions are bets."

All future is uncertain, and all decisions are bets on this future. They aren't right or wrong based on how things turn out.

Future will always remain uncertain. Best you can do is make an honest appraisal of where you are at the present. (5/n)

"Our bets are only as good as our beliefs."

The good news is that our beliefs can be updated. The bad news is that our beliefs are mostly wrong.

We don't vet what we read or hear. Our default mode is to believe and not to question. (6/n)

"Give up the good feeling of being "right" to get rid of the anguish of being "wrong"."

Most of our classification of right and wrong comes purely from hindsight bias and self-serving bias. (7/n)

If you think Scenario A has 70% chance of occurring and Scenario B has 30% chance of occurring and you bet on A but B occurs, were you actually wrong to bet on A?

Answer seems obvious when we put probabilities but we don't do assign probabilities most of the time. (8/n)

Maintaining status-quo is not a riskless bet, though we often perceive it to be this way.

By choosing not to change, you actively decide to give up on other options. (9/n)

Interesting tip from the book

Asking yourself "Wanna bet?" will make you stop and question your belief. (10/n)

Correction. The author's name is Annie Duke. One of the many times I wish that twitter had an edit button....

It helps if you quantify the certainty of your belief. Instead of "I am confident that...", go with "I am 70% confident that..."

This will make you more open to beliefs that are contrary to yours and also make others more willing to correct you. (11/n)

While learning from outcomes, we must be able to separate what part of the outcome was due to luck and what part due to skill.

We have the tendency to attribute the good outcomes to skill and bad outcomes to luck. The exact opposite holds true when we judge others. (12/n)

Backcasting - Imagine you have achieved your goal in the future. Then work backwards to identify what were the possible decisions you took in the "past" so that you were successful in the future.

Premortem - Can also be done keeping in mind unfavorable future. (13/n)

That's it. The book further deals with strategies to help overcome our biases in thinking. Apart from the author's obvious experience as a poker player, it helps that she's a rather good story teller!

"Thinking in Bets" is an enjoyable and useful read (14/14)

Thanks @AnnieDuke