Thinking In Bets
Written by Annie Duke.
⏱️ The book in three sentences
The result of any and all decisions involves a degree of both luck and skill
Don't base your judgement of a decision on the outcome.
Reflect on your decisions and learn from your mistakes by identifying logical errors and biases.
🪞 Reflections
Annie Duke is a former professional poker player and winner of the World Series of Poker 2004. Her career has seen her play in games hosted by seedy basement bars in the middle of Montana to the ostentatious lights of the Vegas Strip. She would likely point out though, that her success is not entirely attributable to her skill or persistence or whatever other feature of strength we often like to label success stories with. Much of her success, and all success, owes many thanks to luck.
As humans, she describes, we don't like to give luck its due. We're evolved not to do so. We're evolved to value certainty. As hunters and gathers, those who assumed the rustle in a bush was a lion were much more successful than those who assumed it was a rat. Certain survival was better than possible survival. Basing the quality of our decisions on that survival, on the outcome, has always been more advantageous - until it's not.
Thinking in Bets is about accepting uncertainty in the quest for improvement. We have to cast aside the outcome-based model of reflection. Even if you arrived home safe and sound, no one would argue that driving drunk was a good decision. Furthermore, if you had been involved in an accident, it may have been because you failed to stop at a red light. Or perhaps you did stop, but another driver did not. Does that make stopping at the red light the wrong decision? Of course not. Every decision we make is a bet on a possible future. More often than not, stopping at a red light is a good bet on a future where we survive. It's just that sometimes the cards don't fall in our favour.
It's an exceptional idea that raises a difficult question. How should we endeavour to improve our decision-making skills if results are not to be trusted? Annie answers the question well. She provides thoughtful guidelines and rules for ignoring our logical fallacies and sidestepping our reactionary biases. But the book is a difficult read.
Thinking in Bets is one of the most bloated books I've ever read. It's not painfully long, but neither is it short. It's not poorly written, but she's not Orwell. The author leans on many real-world, modern-day examples to make her points. Examples range from Pete Carroll's famous Superbowl losing call, to flubs on the Late Show with David Letterman. She calls on those examples frequently, but each time it's almost as if she forgets that she's already used them. She explains the backstory and the significance over and over again. It's exhausting. I wanted to shake her and say "I get it!"
In fact, despite repetitive explanations, the book's biggest downfall is the number of examples used. The point of each chapter is not driven home. It cruises home normally, properly, but instead of slowing down as it pulls into the driveway, it does not. It continues through the garage door, unaware of the damage it is causing, scratching the shine off its exterior, and crashing out the back wall. Ultimately destroying any interest or desire to be involved in the experience. No idea requires six examples to be explained effectively. It is an endless wave of sections and paragraphs to say the same thing with different words.
This is not a book for the impatient. The idea is great, the execution is mediocre. If you follow poker and know Annie Duke already, the book might be one to read. If you're interested in new perspectives on making better decisions skip the book, but read the summary. The concept and advice are still useful.
💥 Personal impact
I had high hopes for Thinking in Bets and despite the disappointing amount of bloat, I still found the core concept and tools useful in my day-to-day life. Prior to reading, I had been struggling with the allocation of my study time budget for CPA PEP. If you have read my Q4 goals post, you'll know that one of my goals for the PEP program is to do well while keeping the time I spend studying within a pre-set boundary. As I explained, I've struggled in the past to keep study time within reason, often forcing myself to study far beyond the point of diminishing returns. My goal, therefore, was to set a time budget for CPA PEP and stick to it religiously. The hope was that this budget would force me to prioritize my time better, leave time for the things I enjoy, and on the whole, maintain motivation through the program.
Where I struggled was actually creating the plan. Prioritization was more difficult than I had anticipated. Are 2 hours really enough for 14 chapters of reading a week? What if it doesn't work? What if I fall behind? As is often the case, it seemed the idea was easier said than done. Until I read Thinking in Bets.
Immediately, I realized Duke's idea was relevant to my conundrum. I will never be certain of how many hours I need to allocate to my study plan because I have no experience in the program. I will be faced with this uncertainty until the program actually begins. What I'm doing by creating a study plan, is simply making a bet on whether the amount of time I need will lead to the future I want.
I simplified Annie's idea into a 3-step process. First, I reminded myself of the goal. To do well, while focusing on my new job and other hobbies. Not to be perfect, or even the best. This step alone went a long way. It's easy to get caught up in your thoughts when faced with incomplete information. We worried about all the little things that could go wrong, and forget about the true end goal. We lose the forest from the trees, so to speak. In regards to my studies, I was reminded that it's okay if I don't know everything.
Secondly, I began to imagine a few of the different scenarios that could occur. Maybe 2 hours really was more than enough time to get through everything. If so, I would thrive, knowing that I've done all I can and covered everything needed. Maybe 2 hours would be just enough to cover the truly important topics. In that case, I would be able to go into the three weekly assignments with a decent base of background knowledge to draw from, and anything I was unsure of could be referenced while I work. Finally, the dreaded third scenario would be that I had massively missed the mark on timing. I would go into the weekly assignments unprepared, flounder through the program and fail the exam. Maybe none of these scenarios would occur, but just thinking through them, helped me wrap my head around the problem.
Last, I tried to apply some percentages to the outcome of each scenario based on my intuition, conversations I've had with other Candidates and CPAs, and my own university experience. Scenario 1, where the time was more than enough, was probably pretty unlikely. To keep things simple I gave it a 5% chance of happening. Scenario 2 seemed much more likely to me. I tried to think about all the work I would be doing on a weekly basis. The 2 hours of prioritized readings, the 3 assignments, the related work I was doing at the accounting firm. Would it be enough to meet my goal of doing well? I thought it was very likely. 80%. Scenario 3 was easier. It was just math. I was left with a 15% likelihood that I would fail.
Given the fact that the plan was not set in stone and I could always adjust as needed, an 85% likelihood of success seemed more than acceptable to me. Now, I can't say these numbers are accurate, but just thinking about the problem this way made me feel much more comfortable with the plan. It helped me to stop worrying and just commit*.* By the time you, the reader, read this, I will have already finished the first 8-week module of the program. Perhaps you'll have an update on how it went. But at the time of writing, I've just finished my first week, and everything seems to be going according to plan.
🗣 Top three quotes
When we think in advance about the chances of alternative outcomes and make a decision based on those chances, it doesn’t automatically make us wrong when things don’t work out.
Ignoring the risk and uncertainty in every decision might make us feel better in the short run, but the cost to the quality of our decision-making can be immense. If we can find ways to become more comfortable with uncertainty, we can see the world more accurately and be better for it.
There is no sin in finding out there is evidence that contradicts what we believe. The only sin is in not using that evidence as objectively as possible to refine that belief going forward.