I read a lot of books. Nearly every book has some nugget of wisdom I can take from it, but it's rare indeed when I read a book and feel like I've hit the mother lode. In 2018, I've been fortunate enough to read two books that I'll be mining for years to come.
The first was Sapiens, the 2015 “brief history of mankind” from Yuval Noah Harari. I finished the second book yesterday: Thinking in Bets by Annie Duke. Duke is a professional poker player; Thinking in Bets is her attempt to take lessons from the world of poker and apply them to making smarter decisions in all aspects of life.
“Thinking in bets starts with recognizing that there are exactly two things that determine how our lives turn out,” Duke writes in the book's introduction. Those two things? The quality of our decisions and luck. “Learning to recognize the difference between the two is what thinking in bets is all about.”
We have complete control over the quality of our decisions but we have little (or no) control over luck.
The Quality of Our Decisions
The first (and greatest) variable in how our lives turn out is the quality of our decisions.
People have a natural tendency to conflate the quality of a decision with the quality of its outcome. They're not the same thing. You can make a smart, rational choice but still get poor results. That doesn't mean you should have made a different choice; it simply means that other factors (such as luck) influenced the results.
Driving home drunk, for instance, is a poor decision. Just because you make arrive home without killing yourself or anyone else does not mean you made a good choice. It merely means you got a good result.
Duke gives an example from professional football. At the end of Super Bowl XLIX, the Seattle Seahawks were down by four points with 26 seconds left in the game. They had the ball with second down at the New England Patriots' one-yard line. While everbody expected them to run the ball, they threw a pass. That pass was intercepted and the Seawhawks lost the game.
Duke argues, though, that the call was fine. In fact, she believes it was a smart call. It was a quality decision. There was only a 2% chance that the ball would be intercepted. There was a high percentage chance of winning the game with a touchdown. Most importantly, if the pass was incomplete, the Seahawks would have two more plays to try again. But if the team opted to run instead? Because they only had one time-out remaining, they'd only get one more chance to score if they failed.
The call wasn't bad. The result was bad. There's a big difference between these two things, but humans generally fail to differentiate between actions and results. Duke says that poker players have a term for this logical fallacy: “resulting”. Resulting is assuming your decision-making is good or bad based on a small set of outcomes.
If you play your cards correctly but still lose a hand, you're “resulting” when you focus on the outcome instead of the quality of your decisions. You cannot control outcomes; you can only control your actions. [Read more…]