18 Ideas About How To Make Smarter Decisions From The Book “Thinking In Bets”

A must-read for an uncertain world.

Josh Spector
Dec 24, 2018 · 8 min read

1. Don’t judge a decision by its outcome.

“Pete Carroll was a victim of our tendency to equate the quality of a decision with the quality of its outcome. Poker players have a word for this: “resulting.” When I started playing poker, more experienced players warned me about the dangers of resulting, cautioning me to resist the temptation to change my strategy just because a few hands didn’t turn out well in the short run.” (page 7)

2. Poker is a better metaphor for life decisions than chess.

“Chess, for all its strategic complexity, isn’t a great model for decision-making in life, where most of our decisions involve hidden information and a much greater influence of luck. This creates a challenge that doesn’t exist in chess: identifying the relative contributions of the decisions we make versus luck in how things turn out.

3. Saying “I’m not sure” helps you make better decisions.

“We are discouraged from saying ‘I don’t know’ or ‘I’m not sure.’ We regard those expressions as vague, unhelpful, and even evasive.

4. Good decision makers are comfortable with uncertainty.

“What good poker players and good decision-makers have in common is their comfort with the world being an uncertain and unpredictable place.

5. Being wrong hurts us more than being right feels good.

“Losses in general feel about two times as bad as wins feel good. SO winning $100 at blackjack feels as good to us as losing $50 feels bad to us. Because being right feels like winning and being wrong feels like losing, that means we need two favorable results for every one unfavorable result just to break even emotionally.” (page 36)

6. Most bets are bets against ourselves.

“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.

7. We want to believe what we already believe.

“It doesn’t take much for any of us to believe something. And once we believe it, protecting that belief guides how we treat further information relevant to the belief.

8. Being smart makes it easier to be biased.

“Surprisingly, being smart can actually make bias worse. Let me give you a different intuitive frame: the smarter you are, the better you are at constructing a narrative that supports your beliefs, rationalizing and framing the data to fit your argument or point of view.” (page 62)

9. Most things aren’t as certain as you think.

“A species becoming ‘extinct’ is pretty common. Arbesman cites the work of a pair of biologists at the University of Queensland who made a list of all 187 species of mammals declared extinct in the last five hundred years. More than a third of those species have subsequently been rediscovered.” (page 68)

10. The way we feel about ourselves is rooted in how we think we compare to others.

“When you ask people if they would rather earn $70,000 in 1900 or $70,000 now, a significant number choose 1900. True, the average yearly income in 1900 was about $450. So we’d be doing phenomenally well compared to our peers from 1900.

11. In the long run, the more objective person always wins.

“We don’t win bets by being in love with our own ideas. We win bets by relentlessly striving to calibrate our beliefs and predictions about the future to more accurately represent the world. In the long run, the more objective person will win against the more biased person. In that way, betting is a form of accountability to accuracy.” (page 130)

12. Be a data sharer.

“Be a data sharer. That’s what experts do. In fact, that’s one of the reasons experts become experts. They understand that sharing data is the best way to move toward accuracy because it extracts insights from your listeners of the highest fidelity.” (page 158)

13. The magic is in the depth of detail.

“Hall of Fame football coach John Madden, in a documentary about Vince Lombardi, told a story about how, as a young assistant coach, he attended a coaching clinic where Lombardi spoke about one play: the power sweep, a running play that he made famous with the Green Bay Packers in the 1960s.

14. Deconstruct decisions before an outcome is known.

“Attorneys can evaluate trial strategy before the verdict comes in. Sales teams can evaluate strategy before learning whether they’ve closed the sale. Traders can vet process prior to positions being established or prior to options expiring. After the outcome, make it a habit when seeking advice to give the details without revealing the outcome.” (page 167)

15. Thinking about the future is actually remembering the future.

“When we imagine the future, we don’t just make it up out of whole cloth, inventing a future based on nothing that we have ever seen or experienced. Our vision of the future, rather, is rooted in our memories of the past.

16. The clearer you see your future self, the more it will impact your decisions.

“Subjects entered a virtual-reality environment, after which they were asked to allocate $1,000 among accounts for various purposes, one of which was a hypothetical retirement account.

17. Predictions aren’t about perfection.

“It’s not about approaching our future predictions from a point of perfection. It’s about acknowledging that we’re already making a prediction about the future every time we make a decision, so we’re better off if we make that explicit. If we’re worried about guessing, we’re already guessing.

18. Conduct a premortem as part of the decision-making process.

“Once we frame the exercise as ‘Okay, we failed. Why did we fail?’ that frees everyone to identify potential points of failure they otherwise might not see or might not bring up for fear of being viewed as a naysayer.

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