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Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts

What does scientific decision-making rely on? What is taboo? How to effectively improve the level of decision-making?

In this book, the author reveals through the high-density decision-making experience of professional poker players: in the face of scientific decision-making with uncertain information, we must first calculate the probability of various options and then make a judgment; whether the decision is successful or not depends on whether we can avoid various prejudices that affect judgment.
Core content.
First, what does scientific decision-making rely on?
What is taboo?
Second, how to effectively improve the level of decision-making?

Annie Duke, the author of the book, has a PhD in cognitive psychology, but she is more conspicuously identified as a top professional poker player.
She has won many world championships and received a prize of more than 4 million US dollars.

Much of this book comes from her 20 years of professional poker experience.
However, this book doesn’t teach you to play poker, it’s about scientific decision-making.
Doesn’t that sound a little strange?
Don’t you rely on luck to play poker? how did it become a science?
Of course, it may be by luck for you to hang out with a few friends, but professional poker players really can’t rely on luck.
And this kind of game has become an excellent place to study and practice scientific decision-making.

This is because professional poker players face typical decision-making tasks.
The so-called decision-making is the process of collecting processing information and then making judgments.
Think about it, isn’t that what poker players do?
According to your own cards, guess the opponent’s cards, and then choose the play with the highest probability of winning.

Although Starting hand has the influence of luck, the final decision to win or lose is not the luck of open hand cards, but your judgment and choice.
In other words, the master can not guarantee that only it Starting good cards and avoid bad, but he knows how to play good cards and how to play bad cards, which is the power of decision-making.

Because of this, when Feng Neumann, the father of game theory, was in-depth study of decision-making and pioneered game theory, the first thing that came to mind was the scene of playing poker.

When playing poker, you can’t see the ace in the hole and opponents’ cards, and the information is limited.
This means that it is more suitable for decision-making research than games such as chess, where the information of both sides is clear at a glance.
Why?
If you think about it, you can see that most of the decision-making problems encountered in life are limited by information, and situations that are clear at a glance are too rare.
So the book says that life is poker, not chess.

Professional poker players receive more stringent decision-making training than ordinary people.
We don’t have many opportunities to make big decisions in our daily life, and it’s hard to improve our level through repeated practice.
But professional poker players are not.
In Duke’s experience, players often need to make 20 decisions in two minutes, and each decision affects the outcome (either win or lose a three-bedroom house).
Therefore, professional poker players can be regarded as professional decision makers.

Because of this, after retiring from professional poker, Duke, in addition to writing books, also began to provide training and consulting services to senior executives such as CEO, and the content is how to make scientific decisions.
Next, let’s share the essence of this book from two aspects.

1. What does scientific decision-making rely on? What is taboo?

According to Duke’s point of view, in the case of uncertain information, scientific decision-making highly depends on probability, and it is most taboo to judge whether the decision is good or not only by the results.

Why would I say that?
Let’s take a look at Duke’s poker game.
She plays Texas hold’em. Each player takes two cards as his or her own card, and only she can see the cards in her hand.
Then five Community Cards are sent out one after another, and everyone can see them.
Every time you post a Community Cards, you need to make a decision about how much to bet, whether to follow or give up.
Wait until the five Community Cards deals, everyone showdown, then who can combine their own cards and Community Cards to form the largest five Suit patterns, who will win.

Where is Texas hold’em ‘s uncertainty?
Obviously, you can only see your own card, what is your opponent’s card?
It’s uncertain.
At the same time, you can only see Community Cards already emitted, “whether this next Community Cards is useful for you?”, “whether you can help you form bigger Hand patterns?” they are not sure.

In the face of such uncertainty, do you think that “I have no choice but to play cards casually based on my feeling”?
If so, the professional poker game will become a pure game of luck.
Fortunately, this is not the case. We have a powerful decision-making tool, and that is probability.

What’s the probability? It’s the possibility of an event.

Think about it, where is the probability in a card game?

“what is the probability that your cards are bigger than your opponent’s cards?” this is the probability.

“what is the probability that the next Community Cards will help you form a great Suit patterns?” this is the probability.

If you go a step further and take into account the psychological factors of the opponent, then, for the performance of your opponent when betting on cards:

What are the chances that they really got the big one?

What percentage could be “they’re just bluffing”?

This is also the probability.

The combination of the above probabilities will become the basis for you to make judgments and decisions.

Then, for professional players, the scientific decision-making in the card game is to make an accurate calculation of the probability as far as possible on the premise of fully collecting information and considering various factors. finally, make the choice that the probability of winning is relatively high and the probability of failure is relatively low.
This is Duke’s view that scientific decision-making under uncertainty is actually the process of measuring probability and making judgment according to probability.
This is the case in the card game, and it is also the case in real life.
For example, when you make a stock selection decision to invest in stocks, you measure the rising probability of each stock, and then make a choice with a higher probability.

As for how to measure probability, this is a profound knowledge, in practice, it also includes the calculation of the risk of failure and other factors, is not the focus of this book.
The focus of this book is to remind you to use probability tools to make scientific decisions.
You must especially avoid judging decisions only by the results.
This bias pays too much attention to the single decision result, which confuses the decision result with the decision system.
What is this prejudice?
Let’s take poker as an analogy.

In a game of cards, unless your cards and Community Cards are sure to form the largest Suit patterns, even if you have a 99% chance of winning this game, you may still turn over in the sewer (fail).
After all, there’s a 1% chance that could happen.
What does that mean?

What does that mean?
It means that no matter how high your level is, no matter how accurate the probability you measure and calculate, how accurate your decision is, you are still likely to lose this game.
No matter how proficient the master is, even in the face of a rookie, there is no guarantee that he must win the next time.

Let me give you an example. Whether it is Texas hold’em or any other game, we often encounter the situation in which the master is defeated by the novice.
When this happens, most people will think that this is mostly because the master’s cards are too bad but the rookie cards are too good.
However, the master himself will explain that although he accurately calculated the probability and made the choice with the highest probability of winning, a small probability event still appeared.

At the same time, the master-hand will not be discouraged by one time defeat.
They will say that although a game is no guarantee of victory over a rookie, they will gain an overwhelming advantage if they play hundred or thousand games with a rookie.
The master is confident because they believe in his ability to obtain and process information, the ability to measure probability and the ability to choose and judge, which is the scientific decision-making system on which he makes a living in the professional arena.
He knows how to separate the decision-making system from the results of a single decision.

Unfortunately, there are only a few experts who know how to separate the two.
No matter on the poker table or in real life, we always confuse the single decision result with the decision system, pay too much attention to the single result, ignore the system, or even take the result as the guide, and use the single result to negate and overthrow the system. this is the most taboo prejudice of scientific decision-making.

Duke tells a story about this prejudice.
She once served as a live commentator in a poker tournament, a game of cards entered the stage of duel, Duke made a professional judgment according to his own decision-making system, player A’s winning rate was 76%, player B’s winning rate was 24%.
But after the last Community Cards was sent out, and the situation was reversed on the court, and player B, who had a relatively low winning rate, won.
At this time, many viewers were in a mood of regret, and one of the audience could not help shouting: Annie Duke, you have miscalculated!
Then Duke calmly explained to the audience that I was not wrong. I said that contestant B’s chance of winning is 24%, not zero. You need to know what 24% means.

The audience in her story is trying to overthrow and negate Duke’s decision-making system with the result of a single decision.
Duke’s explanation has two meanings.
First, the decision-making system can not guarantee the success of a single decision.
Second, events with relatively low probability are still possible.
Of course, this prejudice is not unique to the poker table.
After switching to consulting, Duke asked a group of clients what was the worst decision they had made in the past year.
One of the CEO said with chagrin that his worst decision was to fire the general manager of the company and failed to find a suitable successor after the dismissal, which led to the poor performance of the company.

However, after carefully questioning the reasons for dismissal and the whole decision-making process, Duke found that the decision-making process had been repeatedly weighed and carefully considered, and it was also in line with the management logic.
She judged that there was nothing wrong with the decision-making itself, and it was also in line with the scientific decision-making system of management.
The situation of no successors may only be a temporary phenomenon caused by bad luck.
The chagrin of CEO is precisely because he pays too much attention to the result of a single decision, and even reflects the inappropriate result orientation.
Duke believes that if the CEO uses this bias to overturn his decision-making system, which does not have major flaws, it could cause real trouble for the company.

This is the harm of prejudice, which can affect your mindset and distort your efforts to build a scientific decision-making system.
What’s more, if you indulge in success that depends on good luck at once or twice, you may not even find a way to study probability and build a scientific decision-making system at all.

It’s like a rookie smug after defeating a master by luck, scoffing at the master’s decision-making system, and pinning his hope of winning the next time on the next good luck.
If you always have this state of mind, even if you play cards all your life, you will not make any progress, and you will always be a novice.

It is difficult for us to avoid this prejudice.
If you were given a piece of paper and a pen to write down the failed decisions you had experienced, would you immediately think of “those decisions that didn’t end well”?
On the contrary, you are less sensitive to whether the decision-making system behind you is scientific and whether the process is reasonable.
Why is that?

Duke believes that this stems from the psychological characteristics of human beings.
Human observation and judgment of decision-making results is more intuitive and is often completed quickly on the basis of intuition.
However, the analysis of the decision-making system, which depends on probability, is not so intuitive.
Human intuition is precisely insensitive to probability.

In this case, Nobel laureate Daniel Kahneman once divided the human mode of thinking into system 1 and system 2 in his classic Thinking, Fast and Slow
System 1 relies on intuition, is affected by many prejudices, and is often irrational, but it is fast and tends to dominate.
System 2 is more rational, but it needs active control, which is often covered up by system 1.
For decision-making, if the decision-making result is visible and palpable, it belongs to system 1; if the decision-making system involves probability, much more complex and more abstract, then it belongs to system 2.
People often judge success or failure in terms of results, which is the result that system 1 often occupies a dominant position.

In the face of uncertain factors, scientific decision-making depends on the calculation and judgment of probability.
In such scientific decision-making, the most taboo is to “judge success or failure on the basis of results”, paying too much attention to the results of a single decision and neglecting the establishment of a scientific decision-making system.
The emergence of this prejudice is related to the inherent psychological characteristics of human beings.

But just because you were born with it doesn’t mean you have to be resigned to the fate. In this book, Duke also proposes ways to improve decision-making.

2. How to effectively improve the level of decision-making?

Let’s first introduce an enemy who improves the level of decision-making, called motivated reasoning, which is a kind of thinking inertia that is difficult for us to get rid of in decision-making.
What does it mean?
It means that when you think, you are often affected by preconceived prejudices in your head, and you subconsciously look for evidence to prove and support it.

As we said earlier, the scientific decision-making process is like this: first collect and process the information, then calculate the probability, finally make a judgment, and choose the option with the highest probability of success.
Obviously, this process needs to be rational and objective, and must not be swayed by preconceived prejudices.
If you have preconceived ideas in your mind from the beginning, the next calculations and judgments are likely to be just for show.

There is a typical example in this respect.
When Duke was teaching a poker training class, he found that most students believed in the idea that if the cards played at the beginning were two consecutive cards of the same suit, even if the points of the two cards themselves were small, such as clubs six and clubs seven, people would tend to think that this was a good start, because there was a chance to form a straight, or even a Straight Flush.
Instead of seriously considering what might happen to the opponent and the Community Cards.

The problem is, if you do a little bit of probability calculation, you will find that the probability of starting with six clubs plus seven clubs and finally forming Straight and then winning is actually small, and in all kinds of starts, this is not good.
However, most students already have the idea of winning more than losing in the same flush, which is preconceived, which makes students fall into simplified dynamic reasoning.

Duke once asked some students who believed in flush consecutive cards winning more than losing: “Why do you think that?”
The answer is often, “everyone knows it.”I often see a master win like this on TV.”
Come to think of it, isn’t this finding argument for your own preconceived judgment?
As for the probability of the master using flush continuous cards to win in the end, in fact, no one has done serious thinking.
Obviously, such motivated reasoning inertia will become the enemy of scientific decision-making and judgment.

Let’s take a closer look at why we often fall into motivated reasoning inertia.
In fact, this has something to do with “our psychological process of forming abstract concepts”.
How did our concept or judgment about something, such as “Flush consecutive cards will win more than lose”, come into being?
For a long time, the process that many people imagine is that we first know a certain statement, then verify it, and finally form our own judgment.
However, cognitive psychology has proved by a large number of facts that the above process is only the ideal state in our illusion.
What is more common in the real world is that we believe and accept a statement after we know it, and then, only by chance, when you have the time and will, you want to verify it.
Daniel Gilbert, a professor of psychology at Harvard University, has found that a large number of studies work together to prove the fact that humans are gullible creatures.
We always fall into the inertia of motivated reasoning and give up the rational judgment needed for scientific decision-making, which comes from this gullible instinct.

So, if we are smart enough, can we get rid of motivated reasoning inertia?
The results of psychological research are surprising, and intelligence is not only useless, but may even in turn exacerbate this inertia.
A variety of different experiments designed by psychologists show that smart people do not show any advantage in getting rid of preconceived prejudices, and that their cleverness only provides them with a stronger ability to choose the favorable evidence. endorse the preconceived prejudice in their head.

Note that this is an endorsement, not a verification.
Just as the poker novice is concerned about the TV master’s case of using flush continuous cards to win, it is exactly the same as endorsing the prejudice that “flush consecutive cards win more and lose less” in his mind.

It seems that it is useless to rely on intelligence alone to prevent motivated reasoning from interfering with scientific decision-making.
What does that depend on?
Since motivated reasoning originates from our credulous instinct, which keeps us lazy not to verify, all we need to solve the problem is to verify it consciously and in a planned way.

What is the method of verification?
Duke recommends a good way to review it often.
Replay is originally a chess term, refers to the end of the game, repeat the tactics of the game, to check the pros and cons of each step.
The concept of replay is also found in poker and other competitions.
Experts all know that the key to improving the level is not in the game again and again, but in the review after the game.
Now, the concept of replay has long gone beyond the scope of games and competitions, and everything that involves decision-making can be replayed.

Why is replay useful?
This is because, through replay, you can review your judgments and choices and test the quality of your decisions.
Only through repeated replay, tests can we overcome the influence of motivated reasoning, break the preconceived prejudice and improve the level of decision-making.
For example, if you are a beginner who believes in “flush winning more than losing”, if you can keep a detailed record of the situation every time you get a flush card, and carefully replay, re-examine the effectiveness of your decision, there is a good chance that you will be able to get rid of this bias.
Then your level will really improved.

However, when we do replay, we will also face the influence of prejudice caused by human psychological factors. What is the bias of coming out this time? It’s Self-serving Bias.
The so-called Self-serving Bias, means that we tend to attribute good results to ourselves and bad results to the environment and other factors.
This deviation comes from our instinct for peace of mind, which is almost everywhere in life.
For example, if you fall on the road, the first reaction of your subconscious mind is to complain about the ground, rather than thinking about your inattention or poor legs.
Because of this, according to big data’s records, when multiple cars have traffic accidents, 91% of drivers will say that it is someone else’s fault.

It should be noted that Self-serving Bias is hugely destructive to our efforts to improve decisions through replay, especially when decisions are faced with uncertainties.
Why?
Because of uncertain decision-making games like poker, the results will inevitably be affected by luck.
If we are influenced by Self-serving Bias when we are in replay, we will attribute the winning card to the success of our own decision, and attribute the losing card to bad luck, or the opponent has played a bigger card at Starting hand.
Then after 20 years of such replay, there will be no real improvement in our decision-making system and decision-making level.

So Duke treats Self-serving Bias as the biggest obstacle to the improvement of poker players, even for professionals.
On one occasion, Duke talked to a professional expert about a tournament that he had just lost. The master started with a continuous flush of clubs 6 and clubs 7, and he got the straight, as he wanted, but the opponent got a bigger card and beat his straight.
Duke asked the master, why do you play with confidence when you get six plus seven clubs?
As a result, the master said angrily that this is not the crux of the problem.

Obviously, this master has been caught in the Self-serving Bias, he does not care about whether the club 6 plus 7 is a high win rate to start, his replay did not seriously verify his decision. In his mind, losing to the opponent is just bad luck.
Imagine if his straight ended up winning, even though it was also a highly luck-dependent, low-probability event, would he think so at replay?
No, he will certainly owe it to his boldness and decisiveness.

So you can see that even experts are inevitably affected by Self-serving Bias during replay, and this Self-serving replay, is really of no benefit to improving the level of decision-making.

When you replay, you may encounter problems.
In addition to Self-serving Bias, there is also emotional influence.
Everyone has emotions, especially when you are faced with failed card games and unsuccessful decisions, it is very difficult to recreate the mistakes completely and analyze them calmly and without emotion.

Duke said that when he first entered the professional poker circle, his brother often instructed him to replay.
But even with help, Duke finds it hard to face defeat and hard to calmly review and discuss lost games.
In the end, my brother couldn’t stand it, so he had to come up with a workaround, only replay “Duke won the card games” to review and discuss whether the won cards had more scientific decisions and whether they could play better.

However, Duke himself knows that the effect of this method of replay with only won games must be greatly reduced.
So she recommends a more effective approach that not only helps reduce the emotional impact, but also helps you mitigate the impact of Self-serving Bias as much as possible.
What is this method?
Duke called it the Truth pursuit Group.
Specifically, you need to find a few like-minded people, together to form a group, help each other, complete the replay.
In this way, we can overcome Self-serving Bias and emotional interference as much as possible, remain calm and objective, verify and evaluate the decisions made at each step, turn the replay process into a process of pursuing truth, and really help you improve your decision-making level and decision-making system.

What should such a group look like?
According to Duke’s experience, it does not need too many people, three team members are enough, so that if two people have opposing views, the third person can be the referee.
However, even if there are only three team members, the requirements for team members are not low at all.
First of all, we should fully share the information, otherwise, the views based on the facts can not be consistent, you say yours, I say mine, there is no point in talking all day.
Second, team members should try to be honest about themselves and be objective when commenting on others.
Finally, the working group encourages opinions, criticisms and arguments, and encourages different opinions. However, opinions should be put forward responsibly and should not be casually, and opinions that are not constructive and feasible should not be put forward.

It seems that it is not so easy to find a perfect truth group.
However, as long as you master the idea of overcoming Self-serving Bias and emotional influences by partnering with each other, the quality of your replay will certainly improve.
In addition to the above advice for building a team, partnering with replay, and improving decision-making, Duke has another suggestion to help you improve your decision-making skills, called time travel way.
To put it simply, when you are faced with a decision-making task, you can make a time travel in your brain so that you can make decisions together with who you were in the past, who you are now, and who you are in the future.

What’s the advantage of this?
Research shows that it is often difficult for you to get rid of the influence of mood swings when making decisions now, and decisions are often not calm enough. But when you think about the past and the future, you will mobilize prudent thinking to help improve the quality of decision-making.
More importantly, if you imagine what may happen in the future after the decision is made, or recall the results of similar scenarios in the past, you can have an intuitive sense of the possible direction of the current decision, so that you can make a better decision.

For example, if you have an important meeting to get up early tomorrow, it’s already late today, but you don’t want to sleep yet. You can travel to tomorrow and imagine how you will feel if you are late for the meeting tomorrow morning.
Or you can travel to last year and remember how embarrassed you were when you missed an important meeting because you stayed up late last year.
This kind of time travel is a good way to help you make the right decision.

Summary and review

First, scientific decision-making under uncertain conditions highly depends on the calculation of probability; this kind of decision-making is most taboo “judging success or failure by results”; this prejudice “pays too much attention to the results of a single decision and neglects the decision-making system”.
It is the product of human psychological characteristics.
Second, in order to improve the level of decision-making, we must get rid of motivated reasoning inertia.
The way to get rid of this inertia is to replay, frequently, but the replay process is often interfered by Self-serving Bias. To overcome this interference, we can set up a truth-seeking group and replay together with other teammate.
In addition, taking a “time travel” approach will also help you improve your decision-making.

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