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All-In: Lessons on Decision Making From A Legendary Poker Player

Life is full of decisions, both large and small. We make countless numbers of decisions every day, and it’s often the case that we are doing so at a subconscious or near-subconscious level. But regardless of whether we’re doing so automatically or deliberately, I’m sure you agree that there are situations in life where we wish we made better decisions.

So how can we make better decisions? One way is by learning from the experiences and teachings of a legendary professional poker player.

That poker player is Annie Duke. She won over $4 million throughout her career, collected a World Series of Poker bracelet, and is the only woman to have won the World Series of Poker Tournament of Champions and the NBC National Heads-Up Poker Championship.

Simply put, you do not want to be facing her when you sit down at a poker table.

Now, she’s a corporate consultant and speaker who helps individuals make better decisions. She recently released a book on decision making called Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts.

While playing poker, Duke and her opponents have to make countless decisions, all under extremely stressful circumstances. In fact, poker players may have to make up to 20 decisions per hand. When you’re playing for millions of dollars against some of the best players in the world, you start feeling the pressure.

Considering this and her longstanding interest in cognitive psychology, Duke is an excellent authority on how we make decisions and how we can improve our decision making abilities in our lives. Duke and I spoke about these issues on the latest episode of The Power Of Bold.

You can find the Annie Duke interview on iTunes or Google Play.

While I encourage you to check out the entire interview, I’ve selected some of my favorite insights that I gathered when speaking with Annie.

1. Why Life is Like Poker

A poker table is a highly-charged environment that contains hidden clues and incomplete information. Players like Annie are able to look at their own cards and, in some games, see community cards that are placed in the middle of the table. They can see the reaction of other players when they view their cards and can use opponents’ bets as hints on the strength of their hands.

That said, there’s one important caveat: players can’t see each others’ cards.

This makes it extremely difficult to calculate the best or worst choice in any given scenario. An opposing player may be bluffing, signaling they have a strong hand when they have a weak hand (or vice versa). And even if you win a hand, you often don’t get to see your opponents’ cards. You may have won because of luck rather than skill.

This is unlike a game of chess, for instance, where all of the pieces are on the board and you can see all possible moves.

Ultimately, Annie argues that life is more like poker than chess. We don’t have all the information that we’d like when we’re about to make a decision. There’s incomplete information and it’s not perfectly clear whether you made a good or bad decision based on skill or luck.

Ultimately, we live in a messy word, which makes it difficult to determine how much credence to give to our experiences when using them as a framework for future decisions.

2. The Problem of “Resulting” in Decision Making

Annie presents an intriguing question in Thinking in Bets.

Essentially, she asks readers to think of the best decision they ever made and the worst decision they ever made.

I’m willing to bet that your best decision led to a great outcome and your worst decision led to a pretty terrible outcome.

This is the idea of resulting, which was developed in the poker world but applies to decisions we make in our everyday lives. Resulting means that we have a tendency to equate the quality of a decision with the quality of its outcome.

As just one example, let’s look at Super Bowl 49. The New England Patriots, who were squaring off against the Seattle Seahawks, were in serious trouble in the late stages of the fourth quarter. The Seahawks, down by four, were on the Patriots’ one-yard line with 26 seconds remaining. Instead of handing the ball off to Marshawn Lynch, the Seahawks star running back, Russell Wilson, the Seahawks’ quarterback, attempted a pass, which was intercepted by the Patriots, effectively ending the game.

Bad decision? Many thought so at the time.

Duke, however, explains that commentators and angry fans were simply resulting. Looking at similar situations in NFL history, the Seahawks made a decision with a high probability of success, yet were extremely unlucky (apparently an interception in that situation occurs two to three percent of the time). The decision wasn’t bad, yet the outcome obviously was.

While many of us are “results-oriented”, adopting this attitude may lead to bad decisions down the road. By looking at the outcome when evaluating a decision, we tend to repeat the same thought process that led to that good outcome, even if that outcome was based almost entirely on luck rather than our skill.

True, it’s difficult to evaluate whether a decision was based primarily on skill or luck. There are countless variables at play. But by slowing down and acknowledging that you may be emphasizing the quality of the result over the quality of your decision, you may construct some metaphorical armor that can help you navigate similarly tricky decisions in the future.

3. Thinking in Bets

So how can we increase the odds that we are thinking more objectively and rationally when evaluating an upcoming decision?

We should approach the situation like a poker player.

We should think in bets.

By doing this, we’re evaluating our confidence in a particular belief or beliefs that form the foundation of a particular decision that we will make.

Annie gives a simple hypothetical: if you’re confident that Citizen Kane won Best Picture and I ask you, “Do you want to bet on it?”, you’re probably going to be more diligent in questioning your belief. You may want to pull out Google or Wikipedia. You start embracing uncertainty and may say you’re 80 or 90 percent confident that Citizen Kane won Best Picture (it actually didn’t).

This model can be applied to small and large decisions in your life.

Let’s say you’re pondering whether to leave your job to become an entrepreneur. Annie says that you should try evaluating all of the situations that could occur and assign probabilities to each. Evaluate the potential returns of each scenario, not only in financial terms but in terms of your happiness and life fulfillment. While failure may be the most likely scenario, you may calculate that the payoff to you is worthwhile.

The goal isn’t to calculate the exact percentages of success or failure for each scenario. You don’t need to be precise. Simply put, thinking in bets forces you to become less emotional about your long-held beliefs and evaluate decisions (both large and small) in a more objective manner.

4. Embrace the Premortem

Tell me if this sounds familiar.

When thinking about our future goals, we start by envisioning ourselves as extremely successful, whether that’s being a multimillionaire, on the cover of Business Week or The New York Times, or something else. We’ve made it. After envisioning this, we ask ourselves, “How did I get here?” We then work backward to determine the decisions we need to make to reach our ultimate goal. This is called backcasting.

With all of that said, we may be doing this backward.

Annie recommends that instead of backcasting, we engage in a premortem. This means that we take a more pessimistic look at the future. We envision ourselves in the future and ask “What went wrong? Why didn’t I achieve my goal?”

By doing this, you end up stress-testing your plan so that you can see potential trouble spots that may veer you off course. You’re going to be less reactive to potential obstacles and are more likely to have a plan to continue advancing toward your goal. While initially difficult, living in that negative world can actually increase your probability of success.

While many entrepreneurs emphasize positivity and optimism, the premortem may provide another perspective that can help you avoid some roadblocks down the road. Try it for yourself and see what happens.

5. Find Two Buddies

Unfortunately, there’s some bad news.

Even if we are aware of the problems of resulting and the issues surrounding psychological biases like confirmation bias and hindsight bias, it is extremely difficult to objectively evaluate your decisions in a non-biased fashion. We have a tendency to view good outcomes as a result of skill, bad outcomes as a result of bad luck, and the opposite when evaluating the decisions of others.

So what’s the solution to better decision making?

We all need to find a couple friends to essentially form a “decision pod.” If you can find a couple people with the intention to help you with your decisions (and you to help with theirs), we can get better at decision making.

Some goals of the group should be to hold each member accountable in their goal to become as rational as possible, to poke at the decisions of each member, and to be open and tolerant to views that disagree with ours. The goal is to view information that opposes your perspective not as a threat per se, but as a lifeboat that will help you form more accurate views about the world and, consequently, make better decisions. Once your decisions get better, you increase your long-term odds of success.

Becoming Better Decision Makers

Thinking in Bets is an outstanding book that can guide us as we make decisions in our everyday lives. It certainly isn’t easy, but adopting some of Annie’s strategies can help us become less emotional and less biased when looking at the future.

While we can’t eliminate all of our cognitive biases, we can increase the odds that we’ll be more objective when it matters the most. In a world of uncertainty and hidden information, it may be the best that we can do.

Thanks for reading! Once again, you can access Annie’s interview on The Power Of Bold by visiting our page on iTunes or Google Play. If you’d like to read a transcript of the episode, please visit The Power Of Bold’s website.

P.S.: if you like what you read, feel free to give this post some claps! I greatly appreciate it.

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Adam Pascarella

Adam Pascarella

Founder of Second Order Capital Management and author of Reversed In Part. Visit for more information about me.

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