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ARTICLE: Know When to Hold ‘Em

Editor’s Note: I just saw Annie Duke at a fundraiser for HowIDecide – a great organization furthering decision-making education (you’ll hear more about it soon) – and it wasn’t until ten minutes into our conversation that I realized why I loved her latest book. It’s because it bridges one of the problems I’m often babbling on about:

There’s been wholesale adoption of data science in the last decade or so, but as we’ve discussed, all that data won’t change a thing if we don’t map it to how people actually make decisions, i.e. behavioral, nee people, science. There’s a data/people gap.

I usually try to leap across that gap from the people side. Ms. Duke’s book, IMHO, crosses from the other side, embracing data and its methodology to pull the human side a little closer to better decisions. Both approaches are vital, and I loved getting a well-informed, thoroughly researched and tremendously accessible breakdown of her complementary perspective.

Also, I busted out of the poker part of the fundraiser pretty quickly, so I hope this praise gets me a buy-in to the next one. Nancy Volkers took care of the less pandering book review below.

Before I’d finished the first chapter of Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts,[KA1]  I had already brought it up in two conversations. Granted, I’m sort of a behsci nerd, so maybe it’s not all that surprising. Written by Annie Duke, a professional poker player with graduate-level psychology training, the book melds concepts from disparate fields and several other behavioral science classics, including Thinking, Fast and Slow; Predictably Irrational; and The Signal and the Noise. But Thinking in Bets doesn’t feel derivative; instead, Duke knits together a tangle of ideas, creating something more. She gives solid, practical advice on how to make better decisions, in business and in life. And yes, in poker, if you’re so inclined.

One of Duke’s main points is that even the best, most well-informed decision is subject to circumstances beyond our control. Yet many of us assume that good outcomes are caused by good decisions, and that our “best” decisions are the ones that produce the best results. After an outcome, we also conveniently forget the suite of other outcomes that could have occurred.

Many of us assume that good outcomes are caused by good decisions.

Let’s back up a bit. To maximize the chances of a good outcome, it’s important to make a good decision – but how can we do that? By collecting information and analyzing it objectively. Humans are notoriously bad at this, Duke notes. We’ll believe almost anything, and once we commit to a belief, we’re like a barnacle on a whale. (Editor’s note: See also Confirmation Bias.) You’d think that the rise of the Information Age would ameliorate this problem, but it actually makes things worse. The internet and social media allow us to stay in our “filter bubble,” where we are passively served – or choose to be served – only information that aligns with what we already believe.

Even being aware of your biases usually isn’t enough, because we tend to see things as yes or no, black or white, Yankees or Red Sox. (Well … that last one is pretty easy.) Instead, Duke advocates for beliefs as bets, introducing shades of gray. She imagines a world where we use a confidence scale to have conversations. That would allow for dialogue, rather than opposing monologues. “I’m at 90% on wanting action for global warming, but 20% on the Seahawks making it to the Super Bowl again.”

Duke advocates for beliefs as bets … She imagines a world where we use a confidence scale to have conversations.

We also think a lot of ourselves, so much so that when our decision has a good outcome, we give ourselves credit. On the other hand, when a decision doesn’t work out, we blame bad luck or some other force beyond our control. When we consider other peoples choices, everything’s reversed: Their good outcomes are due to luck or circumstance, whereas negative outcomes are due to their own poor decisions.

Duke suggests flipping the script. When someone else enjoys a good result, give them credit for it and study what they did. When something doesn’t work out for you, figure out your part in the outcome and use the information to help you improve future decisions. According to Duke, if we can feel good about ourselves in three areas – giving credit to others, admitting our mistakes and always finding opportunities to learn – we can grow, improve and become more successful at whatever we’re doing.

Of course, changing the way we think about information, decisions and outcomes isn’t a small thing. Duke suggests finding a like-minded group of people to help initiate change. This is the principle of every support group and there’s a reason – it works.

She also advocates for two processes – scenario planning and backcasting – that can improve decisions. Most of us probably already do both of these already … sometimes. Scenario planning involves imagining a variety of future outcomes, then making informed guesses as to the probability of each outcome occurring. In backcasting, you project yourself into the future and look back. Your team got that $100,000 grant you’re gunning for … How did you do it? What steps did you take to increase your chances of winning that bet?

She also advocates for two processes – scenario planning and backcasting – that can improve decisions

It’s crucial to backcast for negative outcomes as well as positive ones. So you didn’t get the grant. It went to another group instead. Why might that have happened and what can you do now to minimize the chances of it actually happening? Such “negative visualization” might seem like it could hurt, but research shows that it helps us understand obstacles to success and address them before they become problematic.

So, “It’s the end of the month and I haven’t met my sales goals. What did I do or not do that contributed to that?” Or “I didn’t get to the gym at all this week. What stopped me?” might lead to you realize that you’ve been hitting snooze too mcuh, not preparing well enough, or self-sabotaging yourself in some other way.

This negative visualization – in concert with positive visualization – can help us achieve significant behavior change, says Duke.

Finally, hindsight bias is always in the house. Just because things turned out a certain way doesn’t mean it was “meant to be.” Don’t forget all of those other branches on the tree of possible outcomes. It’s not the case that you “should have known” what was going to happen – unless you’re a clairvoyant. Instead of taking a fatalistic view, focus on what you can learn from any outcome, good or bad. It’ll help you make better decisions in the future.

Or, as Duke concludes: We’re never guaranteed a good outcome, but we can always make a good bet.

We’re never guaranteed a good outcome, but we can always make a good bet.