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Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts Hardcover – February 6, 2018
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“A big favorite among investors these days.”—The New York Times
“Outstanding.”—Jason Zweig, The Wall Street Journal
In Super Bowl XLIX, Seahawks coach Pete Carroll made one of the most controversial calls in football history: With 26 seconds remaining, and trailing by four at the Patriots' one-yard line, he called for a pass instead of a hand off to his star running back. The pass was intercepted and the Seahawks lost. Critics called it the dumbest play in history. But was the call really that bad? Or did Carroll actually make a great move that was ruined by bad luck?
Even the best decision doesn't yield the best outcome every time. There's always an element of luck that you can't control, and there is always information that is hidden from view. So the key to long-term success (and avoiding worrying yourself to death) is to think in bets: How sure am I? What are the possible ways things could turn out? What decision has the highest odds of success? Did I land in the unlucky 10% on the strategy that works 90% of the time? Or is my success attributable to dumb luck rather than great decision making?
Annie Duke, a former World Series of Poker champion turned business consultant, draws on examples from business, sports, politics, and (of course) poker to share tools anyone can use to embrace uncertainty and make better decisions. For most people, it's difficult to say "I'm not sure" in a world that values and, even, rewards the appearance of certainty. But professional poker players are comfortable with the fact that great decisions don't always lead to great outcomes and bad decisions don't always lead to bad outcomes.
By shifting your thinking from a need for certainty to a goal of accurately assessing what you know and what you don't, you'll be less vulnerable to reactive emotions, knee-jerk biases, and destructive habits in your decision making. You'll become more confident, calm, compassionate and successful in the long run.
- Print length288 pages
- LanguageEnglish
- PublisherPortfolio
- Publication dateFebruary 6, 2018
- Dimensions8.5 x 5.71 x 0.74 inches
- ISBN-100735216355
- ISBN-13978-0735216358
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Editorial Reviews
Review
"A compact guide to probabilistic domains like poker, or venture capital... Recommend for people operating in the real world." –Marc Andreessen
“Outstanding.” –Jason Zweig, The Wall Street Journal
"Duke’s discussion is full of wisdom and also of fun, warmth, humor and humanity. Her sharp, data-driven analysis comes with a large lesson, which is that losers should be willing to forgive themselves: Sometimes the right play just doesn’t work." –Cass Sunstein, co-author of Nudge
"An elegant fusion of poker-table street-smarts and cognitive science insights. This book will make you both a shrewder and wiser player in the game of life." –Philip E. Tetlock, author of Superforecasting
"Thinking in Bets offers a compelling, and eminently useful, new way to think about life's decisions. Annie Duke has written an important, and often hilarious, book that will help you understand your own shortcomings--and make smarter choices as a result. You can bet on it." –Maria Konnikova, author of The Confidence Game and Mastermind
"The insights Duke offers in this book are incredibly helpful when we contemplate decisions in the face of multiple possible outcomes, and that renders her book enormously applicable to the world of investing." –Howard Marks, co-chairman, Oaktree Capital Management and author of The Most Important Thing
"Through wonderful storytelling and sly wit, Annie Duke has crafted the ultimate guide to thinking about risk. We can all learn how to make better decisions by learning from someone who made choices for a living, with millions on the line." –Charles Duhigg, author of The Power of Habit and Smarter Faster Better
"Brilliant. Buy ten copies and give one to everyone you work with. It's that good." –Seth Godin, author of The Icarus Deception
"A mind-bending and indispensable book for entrepreneurs, leaders, and anyone who faces risk on a regular basis." –Olivia Fox Cabane, author of The Net and the Butterfly
“A highly-readable balance between memorable, real-world analogies and hardcore behavioral science studies... The book is packed with insights.” –John Greathouse, Forbes
About the Author
Excerpt. © Reprinted by permission. All rights reserved.
Life Is Poker, Not Chess
Pete Carroll and the Monday Morning Quarterbacks
One of the most controversial decisions in Super Bowl history took place in the closing seconds of Super Bowl XLIX in 2015. The Seattle Seahawks, with twenty-six seconds remaining and trailing by four points, had the ball on second down at the New England Patriots' one-yard line. Everybody expected Seahawks coach Pete Carroll to call for a handoff to running back Marshawn Lynch. Why wouldn't you expect that call? It was a short-yardage situation and Lynch was one of the best running backs in the NFL.
Instead, Carroll called for quarterback Russell Wilson to pass. New England intercepted the ball, winning the Super Bowl moments later. The headlines the next day were brutal:
USA Today: "What on Earth Was Seattle Thinking with Worst Play Call in NFL History?"
Washington Post: "'Worst Play-Call in Super Bowl History' Will Forever Alter Perception of Seahawks, Patriots"
FoxSports.com: "Dumbest Call in Super Bowl History Could Be Beginning of the End for Seattle Seahawks"
Seattle Times: "Seahawks Lost Because of the Worst Call in Super Bowl History"
The New Yorker: "A Coach's Terrible Super Bowl Mistake"
Although the matter was considered by nearly every pundit as beyond debate, a few outlying voices argued that the play choice was sound, if not brilliant. Benjamin Morris's analysis on FiveThirtyEight.com and Brian Burke's on Slate.com convincingly argued that the decision to throw the ball was totally defensible, invoking clock-management and end-of-game considerations. They also pointed out that an interception was an extremely unlikely outcome. (Out of sixty-six passes attempted from an opponent's one-yard line during the season, zero had been intercepted. In the previous fifteen seasons, the interception rate in that situation was about 2%.)
Those dissenting voices didn't make a dent in the avalanche of criticism directed at Pete Carroll. Whether or not you buy into the contrarian analysis, most people didn't want to give Carroll the credit for having thought it through, or having any reason at all for his call. That raises the question: Why did so many people so strongly believe that Pete Carroll got it so wrong?
We can sum it up in four words: the play didn't work.
Take a moment to imagine that Wilson completed the pass for a game-winning touchdown. Wouldn't the headlines change to "Brilliant Call" or "Seahawks Win Super Bowl on Surprise Play" or "Carroll Outsmarts Belichick"? Or imagine the pass had been incomplete and the Seahawks scored (or didn't) on a third- or fourth-down running play. The headlines would be about those other plays. What Pete Carroll called on second down would have been ignored.
Carroll got unlucky. He had control over the quality of the play-call decision, but not over how it turned out. It was exactly because he didn't get a favorable result that he took the heat. He called a play that had a high percentage of ending in a game-winning touchdown or an incomplete pass (which would have allowed two more plays for the Seahawks to hand off the ball to Marshawn Lynch). He made a good-quality decision that got a bad result.
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.
Pete Carroll understood that his universe of critics was guilty of resulting. Four days after the Super Bowl, he appeared on the Today show and acknowledged, "It was the worst result of a call ever," adding, "The call would have been a great one if we catch it. It would have been just fine, and nobody would have thought twice about it."
Why are we so bad at separating luck and skill? Why are we so uncomfortable knowing that results can be beyond our control? Why do we create such a strong connection between results and the quality of the decisions preceding them? How can we avoid falling into the trap of the Monday Morning Quarterback, whether it is in analyzing someone else's decision or in making and reviewing the decisions in our own lives?
The hazards of resulting
Take a moment to imagine your best decision in the last year. Now take a moment to imagine your worst decision.
I'm willing to bet that your best decision preceded a good result and the worst decision preceded a bad result.
That is a safe bet for me because resulting isn't just something we do from afar. Monday Morning Quarterbacks are an easy target, as are writers and bloggers providing instant analysis to a mass audience. But, as I found out from my own experiences in poker, resulting is a routine thinking pattern that bedevils all of us. Drawing an overly tight relationship between results and decision quality affects our decisions every day, potentially with far-reaching, catastrophic consequences.
When I consult with executives, I sometimes start with this exercise. I ask group members to come to our first meeting with a brief description of their best and worst decisions of the previous year. I have yet to come across someone who doesn't identify their best and worst results rather than their best and worst decisions.
In a consulting meeting with a group of CEOs and business owners, one member of the group identified firing the president of his company as his worst decision. He explained, "Since we fired him, the search for a replacement has been awful. We've had two different people on the job. Sales are falling. The company's not doing well. We haven't had anybody come in who actually turns out to be as good as he was."
That sounds like a disastrous result, but I was curious to probe into why the CEO thought the decision to fire his president was so bad (other than that it didn't work out).
He explained the decision process and the basis of the conclusion to fire the president. "We looked at our direct competitors and comparable companies, and concluded we weren't performing up to their level. We thought we could perform and grow at that level and that it was probably a leadership issue."
I asked whether the process included working with the president to understand his skill gaps and what he could be doing better. The company had, indeed, worked with him to identify his skill gaps. The CEO hired an executive coach to work with him on improving his leadership skills, the chief weakness identified.
In addition, after executive coaching failed to produce improved performance, the company considered splitting the president's responsibilities, having him focus on his strengths and moving other responsibilities to another executive. They rejected that idea, concluding that the president's morale would suffer, employees would likely perceive it as a vote of no confidence, and it would put extra financial pressure on the company to split a position they believed one person could fill.
Finally, the CEO provided some background about the company's experience making high-level outside hires and its understanding of the available talent. It sounded like the CEO had a reasonable basis for believing they would find someone better.
I asked the assembled group, "Who thinks this was a bad decision?" Not surprisingly, everybody agreed the company had gone through a thoughtful process and made a decision that was reasonable given what they knew at the time.
It sounded like a bad result, not a bad decision. The imperfect relationship between results and decision quality devastated the CEO and adversely affected subsequent decisions regarding the company. The CEO had identified the decision as a mistake solely because it didn't work out. He obviously felt a lot of anguish and regret because of the decision. He stated very clearly that he thought he should have known that the decision to fire the president would turn out badly. His decision-making behavior going forward reflected the belief that he made a mistake. He was not only resulting but also succumbing to its companion, hindsight bias. Hindsight bias is the tendency, after an outcome is known, to see the outcome as having been inevitable. When we say, "I should have known that would happen," or, "I should have seen it coming," we are succumbing to hindsight bias.
Those beliefs develop from an overly tight connection between outcomes and decisions. That is typical of how we evaluate our past decisions. Like the army of critics of Pete Carroll's decision to pass on the last play of the Super Bowl, the CEO had been guilty of resulting, ignoring his (and his company's) careful analysis and focusing only on the poor outcome. The decision didn't work out, and he treated that result as if it were an inevitable consequence rather than a probabilistic one.
In the exercise I do of identifying your best and worst decisions, I never seem to come across anyone who identifies a bad decision where they got lucky with the result, or a well-reasoned decision that didn't pan out. We link results with decisions even though it is easy to point out indisputable examples where the relationship between decisions and results isn't so perfectly correlated. No sober person thinks getting home safely after driving drunk reflects a good decision or good driving ability. Changing future decisions based on that lucky result is dangerous and unheard of (unless you are reasoning this out while drunk and obviously deluding yourself).
Yet this is exactly what happened to that CEO. He changed his behavior based on the quality of the result rather than the quality of the decision-making process. He decided he drove better when he was drunk.
Quick or dead: our brains weren't built for rationality
The irrationality displayed by Pete Carroll's critics and the CEO should come as no surprise to anyone familiar with behavioral economics. Thanks to the work of many brilliant psychologists, economists, cognitive researchers, and neuroscientists, there are a number of excellent books that explain why humans are plagued by certain kinds of irrationality in decision-making. (If you are unaware of these books, see the Selected Bibliography and Recommendations for Further Reading.) But here's a summary.
To start, our brains evolved to create certainty and order. We are uncomfortable with the idea that luck plays a significant role in our lives. We recognize the existence of luck, but we resist the idea that, despite our best efforts, things might not work out the way we want. It feels better for us to imagine the world as an orderly place, where randomness does not wreak havoc and things are perfectly predictable. We evolved to see the world that way. Creating order out of chaos has been necessary for our survival.
When our ancestors heard rustling on the savanna and a lion jumped out, making a connection between "rustling" and "lions" could save their lives on later occasions. Finding predictable connections is, literally, how our species survived. Science writer, historian, and skeptic Michael Shermer, in The Believing Brain, explains why we have historically (and prehistorically) looked for connections even if they were doubtful or false. Incorrectly interpreting rustling from the wind as an oncoming lion is called a type I error, a false positive. The consequences of such an error were much less grave than those of a type II error, a false negative. A false negative could have been fatal: hearing rustling and always assuming it's the wind would have gotten our ancestors eaten, and we wouldn't be here.
Seeking certainty helped keep us alive all this time, but it can wreak havoc on our decisions in an uncertain world. When we work backward from results to figure out why those things happened, we are susceptible to a variety of cognitive traps, like assuming causation when there is only a correlation, or cherry-picking data to confirm the narrative we prefer. We will pound a lot of square pegs into round holes to maintain the illusion of a tight relationship between our outcomes and our decisions.
Different brain functions compete to control our decisions. Nobel laureate and psychology professor Daniel Kahneman, in his 2011 best-selling Thinking, Fast and Slow, popularized the labels of "System 1" and "System 2." He characterized System 1 as "fast thinking." System 1 is what causes you to hit the brakes the instant someone jumps into the street in front of your car. It encompasses reflex, instinct, intuition, impulse, and automatic processing. System 2, "slow thinking," is how we choose, concentrate, and expend mental energy. Kahneman explains how System 1 and System 2 are capable of dividing and conquering our decision-making but work mischief when they conflict.
I particularly like the descriptive labels "reflexive mind" and "deliberative mind" favored by psychologist Gary Marcus. In his 2008 book, Kluge: The Haphazard Evolution of the Human Mind, he wrote, "Our thinking can be divided into two streams, one that is fast, automatic, and largely unconscious, and another that is slow, deliberate, and judicious." The first system, "the reflexive system, seems to do its thing rapidly and automatically, with or without our conscious awareness." The second system, "the deliberative system . . . deliberates, it considers, it chews over the facts."
The differences between the systems are more than just labels. Automatic processing originates in the evolutionarily older parts of the brain, including the cerebellum, basal ganglia, and amygdala. Our deliberative mind operates out of the prefrontal cortex.
Colin Camerer, a professor of behavioral economics at Caltech and leading speaker and researcher on the intersection of game theory and neuroscience, explained to me the practical folly of imagining that we could just get our deliberative minds to do more of the decision-making work. "We have this thin layer of prefrontal cortex made just for us, sitting on top of this big animal brain. Getting this thin little layer to handle more is unrealistic." The prefrontal cortex doesn't control most of the decisions we make every day. We can't fundamentally get more out of that unique, thin layer of prefrontal cortex. "It's already overtaxed," he told me.
These are the brains we have and they aren't changing anytime soon. Making more rational decisions isn't just a matter of willpower or consciously handling more decisions in deliberative mind. Our deliberative capacity is already maxed out. We don't have the option, once we recognize the problem, of merely shifting the work to a different part of the brain, as if you hurt your back lifting boxes and shifted to relying on your leg muscles.
Both deliberative and reflexive mind are necessary for our survival and advancement. The big decisions about what we want to accomplish recruit the deliberative system. Most of the decisions we execute on the way to achieving those goals, however, occur in reflexive mind. The shortcuts built into the automatic processing system kept us from standing around on the savanna, debating the origin of a potentially threatening sound while its source devoured us. Those shortcuts keep us alive, routinely executing the thousands of decisions that make it possible for us to live our daily lives.
Product details
- Publisher : Portfolio; Illustrated edition (February 6, 2018)
- Language : English
- Hardcover : 288 pages
- ISBN-10 : 0735216355
- ISBN-13 : 978-0735216358
- Item Weight : 14.1 ounces
- Dimensions : 8.5 x 5.71 x 0.74 inches
- Best Sellers Rank: #13,380 in Books (See Top 100 in Books)
- #34 in Business Decision Making
- #56 in Decision-Making & Problem Solving
- #57 in Cognitive Psychology (Books)
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About the author

Annie Duke has leveraged her expertise in the science of smart decision making to excel at pursuits as varied as championship poker to public speaking. On February 6, 2018, Annie’s first book for general audiences, “Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts” will be released by Portfolio, an imprint of Penguin Random House. In this book, Annie reveals to readers the lessons she regularly shares with her corporate audiences, which have been cultivated by combining her academic studies in cognitive psychology with real-life decision making experiences at the poker table.
For two decades, Annie was one of the top poker players in the world. In 2004, she bested a field of 234 players to win her first World Series of Poker (WSOP) bracelet. The same year, she triumphed in the $2 million winner-take-all, invitation-only WSOP Tournament of Champions. In 2010, she won the prestigious NBC National Heads-Up Poker Championship. Prior to becoming a professional poker player, Annie was awarded a National Science Foundation Fellowship to study Cognitive Psychology at the University of Pennsylvania.
Annie now spends her time writing, coaching and speaking on a range of topics such as decision fitness, emotional control, productive decision groups and embracing uncertainty. She is a regularly sought-after public speaker, addressing thousands in keynote remarks at conferences for organizations ranging from the Investment Management Consultants Association to the Big Ten Conference. She has been brought in to speak to the executive teams or sales forces of organizations like Marriott and Gaylord Resorts, among others. She is a sought-after speaker in the financial sector, with clients such as Susqehanna International Group and CitiBank. Annie regularly shares her observations on decision making and critical thinking skills on her blog, Annie’s Analysis, and has shared her poker knowledge through a series of best-selling poker instruction and theory books, including Decide to Play Great Poker and The Middle Zone: Mastering the Most difficult Hands in Hold’em Poker (both co-authored with John Vorhaus).
Annie is a master storyteller, having performed three times for The Moth, an organization that preserves the art of spoken word storytelling. One of her stories was selected by The Moth as one of their top 50 stories and featured in the organization’s first-ever book. Her passion for making a difference has helped raise millions for charitable causes. In 2006, she founded Ante Up for Africa along with actor Don Cheadle and Norman Epstein, which has raised more than $4 million for Africans in need. She has also served on the board of The Decision Education Foundation. In 2009, she appeared on The Celebrity Apprentice, and raised $730,000 for Refugees International, a charity that advocates for refugees around the world. In October 2013, Annie became a national board member for After School All-Stars. In 2014, Annie co-founded How I Decide, a nonprofit with the goal of helping young people develop the essential life skills of critical thinking and decision making. In 2015, she became a member of the NationSwell Council. In 2016, she began serving on the board of directors of The Franklin Institute, one of America’s oldest and greatest science museums.
Annie currently resides in the Philadelphia area. You can visit her website at www.annieduke.com.
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Customers find the book provides helpful insights and tips on decision making. They find it easy to read and a good book for beginners and intermediate readers. The writing style is described as powerful, charming, and easy to understand. Readers appreciate the author's sense of humor and lively writing style. Opinions differ on the pacing - some find the stories well-told and enjoyable, while others find them boring. There are mixed views on the length - some consider it suitable and short, while others feel it could have been much shorter.
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Customers find the book provides useful insights and tips on decision making. They appreciate the practical examples and insights into psychology and self-reflection. Readers also mention that the book teaches advanced statistics in an understandable way. Overall, it offers an interesting approach to understanding psychology and self-reflective decision making.
"...Although the math is absent, some may find some of the concepts a bit difficult or, on the surface, repetitive, as evidenced by some of the reviews..." Read more
"...a person can be more objective, learn from past events, improve their decision making and increase the likelihood of better outcomes...." Read more
"...And Duke lays out for us the roots of these biases and trenchant advice on how to circumvent them -- with sometimes jarring effectiveness designed..." Read more
"...Thanks to you, I now have a deeper understanding of risk management and how to make sure I keep the worst case scenario in mind first (pre-mortem)..." Read more
Customers find the book easy to read and understand. They say it's a good book for beginners and intermediate readers, interesting, and worthwhile for personal improvement. The book is clear, concise, and to the point, providing quality advice on how to think and act through life.
"...None-the-less, I highly recommend it as worthwhile for both personal improvement, as well as supplemental reading in almost any graduate school..." Read more
"...with such charm and insightfulness (and humor) that it succeeds splendidly on both agendas...." Read more
"...It is, quite simply, one of the best business books and actionable management books I have read in years -- it's up there with Peter Thiel's &#..." Read more
"...understanding the concepts of probability easy to understand and enjoyable to read. I highly recommended the book! 5 Stars" Read more
Customers find the book's writing style engaging and easy to read. They describe it as a journal of observations and personal lessons learned, providing answers in a well-thought-out manner. Readers praise the author's skill and consider the book straightforward with good examples.
"...the one-third mark I realized (duh) that it's both and it's written with such charm and insightfulness (and humor) that it succeeds splendidly on..." Read more
"...able to demonstrate her thoughts in great detail in this short, easy to read, value packed book with a touch of humor...." Read more
"...This book is really well written which made understanding the concepts of probability easy to understand and enjoyable to read...." Read more
"...2 pages to explain a simple small thing, which is kinda of lengthy and wordy." Read more
Customers enjoy the book's humor. They find it entertaining and engaging, with a lively writing style that keeps them interested. The author has a sense of humor that can turn simple settings into hilarious psychodramas.
"...Oh, and in passing, she's an engaging writer with a sense of humor who can turn a simple setting into a hilarious little psychodrama, especially..." Read more
"...; it's like talking to Annie Duke in your living room with the right blend of snark, deep insights wrapped in powerful examples, and force...." Read more
"...Annie Duke writes clearly, with verve and wit and uses examples not just from the poker table but from her experience as a decision strategist and..." Read more
"...The author writes in a clear and lively manner, which keeps you intrested thoughout the book...." Read more
Customers have mixed views on the pacing of the book. Some find the stories well-told and enjoyable to read, with good anecdotes and thorough explanations. Others feel the examples are repetitive and boring, making the first half of the book tedious and repetitive.
"Descent content. In my opinion only a handful of insightful points, it could have been way shorter. I wouldn’t recommend reading the whole book." Read more
"A lively read that presents a useful and novel framework for analyzing decisions when you are faced with less than perfect information: that is, the..." Read more
"As many have stated here and elsewhere, the first half of the book is a drag...." Read more
"...It’s in the first chapter. Everything after that seemed not nearly as interesting and was a rehash of a lot of basic points about biases and..." Read more
Customers have different views on the book's length. Some find it short and easy to read once to get granular details, while others feel it could be much shorter. The length is considered suitable for both reading once and comb over.
"...has been able to demonstrate her thoughts in great detail in this short, easy to read, value packed book with a touch of humor...." Read more
"...In my opinion only a handful of insightful points, it could have been way shorter. I wouldn’t recommend reading the whole book." Read more
"...I believe its the perfect size to both read once to get granular detail, yet comb over in coming years to quickly get refreshed...." Read more
"While there were certainly some helpful nuggets in this book, it was far too long...." Read more
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I bet you’ll win more after reading this!
Top reviews from the United States
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- Reviewed in the United States on June 29, 2020This book is about how to make better decisions, from the trivial to the most consequential,
in all endeavors of life: personal, business, political/economic forecasting, gambling, etc.
It explains how to think about potential decision options, given that most entail varying
degrees of risky or uncertain outcomes. Without attempting to bog the reader down in
the mathematics of probability theory, the core of most textbook approaches
to decision making, it clearly demonstrates how to incorporate probabilistic
uncertainty into our decision-making thought processes. Since most decisions
we make lead to outcomes which have an element of probabilistic uncertainty,
the book's approach is relevant to all walks of life.
Although Duke does not frame it this way, I think a brief explanation
of two fundamentally different types of situations captured by the tool of
probabilistic reasoning may be helpful. This dichotomy leads to what have
been termed Objective and Subjective probabilities.
Objective probabilities are those associated with outcomes that are truly random
with specific known numerical probabilities governing various occurrences.
For these, no amount of thinking or information on the part of those of us observing
the situation can improve on understanding inherent randomness of the underlying
activity leading to some outcome, i.e., the known probabilities are the best we can
do in anticipating the ultimate outcome of the event. In other words, we can't improve
on the odds of various outcomes however smart we may be. The best examples for
this type of probability are things happening in the world of quantum mechanics,
e.g., predicting the time at which a radioactive element or a neutron will decay.
A close second for most practical purposes would be the outcome of the spin of a
roulette wheel or the outcome of a fair roll of a pair of dice. Objective probabilities are set by
the laws of nature, and, once known, the actual outcomes of a large number of repetitive
observations of the same situation will lead to a predictable distribution of outcomes.
Subjective probabilities, on the other hand, are probabilities we assign to various
outcomes when faced with decisions leading to uncertain outcomes. They are not
fixed or absolute numbers driven by the laws of nature. We may assign
a numerical value to a particular outcome, e.g., a 70% chance the Patriots will win
the Super Bowl against the Eagles, or, they may be qualitative rankings of possible
outcomes, e.g., highly likely, pretty likely, not sure, very unlikely, etc. Three key things
about Subjective probabilities are:
1. Different people thinking about the same event will usually have different
estimates of the probabilistic outcomes. Subjective probabilities are not facts.
They are opinions.
2. The information/knowledge the decision maker has about the situation will
affect their probability estimates of different outcomes.
3. Good decision makers in many particular endeavors like poker or investing will usually,
i.e., more frequently but not always, have better success in predicting uncertain outcomes
than will poor decision makers.
During the first couple of hundred years that mathematicians tried to develop the
field of probability, they were generally focused on thinking about things they believed
were governed by Objective probabilities. Even the game of poker was thought of in this
way for years. Early in the 20th century, thinkers began to crystallize the idea of Subjective
probabilities as distinctly different from Objective probabilities. John Maynard Keynes
attempted to develop a full blown theory with his 1921 book "A Treatise On Probability".
Although it had some excellent ideas, it did not succeed in laying out a firm mathematical basis
for Subjective probability. This took the Italian mathematician, Bruno de Finetti, to define
a mathematically rigorous treatment of Subjective probability in his 1937 book. And,
thinking in bets was core to his approach.
By the 1950's, de Finetti's approach became the basis for aspects of economics , game theory,
and decision making under uncertainty. The latter pertains to virtually all decision making we
encounter in daily life.
So, what does Subjective probability have to do with bets. In short, everything. When we make a bet, we do so with a view of the chances of winning, either a qualitative view, or a quantitative view, i.e., a probability. A bet is the manifestation of one's personal estimate of the Subjective probability of the outcome you are favoring.
The beauty of Duke's book is that it explains with lots of examples of how to apply
Subjective probabilistic thinking in all sorts of situations without having to worry about
the sound basis of the underlying mathematics. Poker is a great example of a situation in which a
Subjective probabilistic assessment is critical, since trying to gauge how others will behave in playing a hand is truly a subjective, rather than objective, assessment. Thus her poker and human psychology background really do mark her as expert in teaching smart decision making for a broad audience. Since information and knowledge are key to making sound estimates of Subjective probabilities, Duke spends a lot of time on how to build a broad information base pertaining to prospective decisions, and how to guard against biases we naturally have that can cause us to resist relevant information that may rub us wrong. She implies that for lots of decisions, one can do better simply by stepping back and thinking about the pro's and con's, rather than just going on an impulse. Oftentimes we have relevant information in our head, if only we would think about it. Get external inputs as well, e.g., friends or Google. Information is key and being open to inputs that may conflict with your beliefs will improve your decision quality in the long run.
Thus,the book is suitable for both the mathematically inclined and the mathematically averse. Although the math is absent, some may find some of the concepts a bit difficult or, on the surface, repetitive, as evidenced by some of the reviews posted here on Amazon. Stated differently, it may be difficult sometimes to appreciate the applicability of the advice to settings that go beyond the specific example used preceding her current point, but a little thought brings it home. No doubt, a few readers of the book will 'get it' and some won't, though they may still find some of the stories entertaining. None-the-less, I highly recommend it as worthwhile for both personal improvement, as well as supplemental reading in almost any graduate school curriculum.
- Reviewed in the United States on January 25, 2025Annie presents many thought provoking concepts about the uncertain nature of decisions and outcomes. Some of the ideas reminded me of Nassim Taleb and his Anti-fragile Book. Accepting the uncertainty of outcomes, a person can be more objective, learn from past events, improve their decision making and increase the likelihood of better outcomes. Following this approach might also lead to identifying and accepting new opportunities with asymmetric returns.
- Reviewed in the United States on April 4, 2018About a quarter of the way into this latest missive from Annie Duke I found myself wondering if she's writing for the business community but in a way that regular folks, you know ones like you and me who make decisions all the time, would get something out of or written for us but in a way that those in the corporate world would be well-advised to read. At about the one-third mark I realized (duh) that it's both and it's written with such charm and insightfulness (and humor) that it succeeds splendidly on both agendas.
Duke is a rare trifecta: she has a solid academic background in cognitive psychology, she was a world-class professional poker player, and is currently a corporate and business consultant. All three of these "Dukes" are poured into the book in compelling and unique ways. I'm a cognitive psychologist and have played a lot of poker (not in her league I can assure you) and so I'm intrigued by the way she lays out the lessons we need to learn.
First: in science, poker, and business you rarely, if ever, have all the information. In poker you don't know your opponents cards and you don't know what they're thinking -- including what they're thinking about what they think you're thinking. In scientific research you only know what's been discovered so far. You're ignorant about the unknown and are trying to extrapolate from current knowledge. In business and finance you unsure of the future, only know some things about markets, and work with incomplete models. In these partial information settings decision-making becomes difficult, tricky, and often contaminated by bias.
Second: virtually all the interesting things we do in life are bets. Every even mildly complex task we confront or decision we make is, in effect, a bet. And bets have consequences. We take an umbrella because we're betting it will rain. We hire a new manager and are betting on her skills. We chose college A over B and bet that we'll get better education. And in these and the myriad other bets we make every day, we don't have all the facts and, because of the ways in which our minds tend to work, we often run afoul of biases and misunderstandings that lead us to make poor decisions.
And Duke lays out for us the roots of these biases and trenchant advice on how to circumvent them -- with sometimes jarring effectiveness designed to force the reader to suddenly confront what they think they know but don't. Some examples: a) Try asking someone "want to bet?" when they claim something to be true. It puts them in a totally different place than when they were simply stating what they believed to be true. b) Look at decisions on the basis of how they were made rather than how they turned out -- you can win with a poor decision and lose with a good one but in the long run, it's the decision-making process that counts. c) Emphasize the need to stop thinking in certainties and recognize probabilities. d) Stop imagining situations as either-or and acknowledge that most things lie along continuums. e) Recognize when you're in an "echo-chamber" where only viewpoints you're currently comfortable with are expressed. Quoting Mill, she reminds us that truth only emerges when all sides are heard.
Along the way we're treated to stories of gamblers, pain and triumph in poker games, the noodling of philosophers, judicial habits of Supreme Court Justices, corporate CEO's, betting markets, biases of social psychologists, a short but penetrating exegesis on skepticism, some advice on child rearing, and a discourse on mental time travel -- and no, I'm not going to tell you what that is. Read the damn book.
Duke makes her living now as a writer and presenter of her approach to decision-making, a corporate speaker, and a business consultant. I can just imagine jaws dropping when she tells a group of high powered corporate execs that one sure way to succeed is to make sure they have naysayers in corporate headquarters, ensure that they ask for dissenting views and voices before making major (or minor) decisions.
Oh, and in passing, she's an engaging writer with a sense of humor who can turn a simple setting into a hilarious little psychodrama, especially when revealing some of the weird and wonderful things that happened to her during her days as a professional poker player.
- Reviewed in the United States on June 26, 2024A sentence in the last paragraph sums up the book: "Life, like poker, is one long game, and there are going to be a lot of losses, Even After Making The Best Possible Bets."
- Reviewed in the United States on February 1, 2025I must say, I am very impressed with the eloquence Annie has been able to demonstrate her thoughts in great detail in this short, easy to read, value packed book with a touch of humor.
Thank you Annie, for taking the time to write this book and being open to sharing with those who can benefit from your teachings.
Thanks to you, I now have a deeper understanding of risk management and how to make sure I keep the worst case scenario in mind first (pre-mortem) before making a trade and to do my best to give myself the best opportunity of a high probability scenario that will land me on the right side of the trade.
As always, knowledge is potential power. Applied knowledge is life changing.
Top reviews from other countries
Jorge FortesReviewed in Mexico on November 7, 20235.0 out of 5 stars Magnificent
Must read, enlightening and very enjoying piece of art.
Bet on this book, there is no chance to lose.. well you just might lose some wrong, bad and outdated ideas you may have about risk, betting and desiton making.
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Alessandro BottoniReviewed in Italy on January 19, 20255.0 out of 5 stars Una visione professionale sull'arte di prendere decisioni in condizioni di incertezza
Si potrebbe credere che "Thinking in Bets" sia un libro scritto da un giocatore di poker per altri giocatori di poker ma non è così. È un libro scritto da una persona che ha accettato la natura imprevedibile della Realtà e che cerca di affrontarla nel modo più razionale e meno pericoloso che sia possibile. Da molti punti di vista, si impara più dalla lettura di questo libro che dallo studio di quasi tutta la teoria delle probabilità e della statistica. Per quanto mi riguarda, l'ho letto per capire certi aspetti aleatori della finanza ma credo che chiunque ne possa trarre un insegnameno utile, qualunque cosa faccia per vivere e quali che siano i suoi interessi personali. Consigliatissimo.
MarcReviewed in Sweden on November 26, 20245.0 out of 5 stars Must read
Key Concepts and Frameworks
1. Uncertainty and Decision Quality:
• Acknowledge that the world is inherently uncertain, and outcomes are influenced by a mix of luck and skill.
• Great decisions don’t guarantee good outcomes but increase the probability of success.
• Improving decision quality requires recognizing uncertainty, evaluating probabilities, and preparing for alternative futures.
2. Cognitive Biases:
• Motivated Reasoning: We protect our beliefs by seeking confirming evidence and discrediting contradictory information.
• Self-Serving Bias: Success is attributed to skill, while failures are blamed on luck or external factors.
• Inside Bias: Overconfidence in our knowledge and underestimation of what we don’t know distort judgment.
• Resulting: Judging decisions based solely on outcomes rather than the quality of the process.
3. Skepticism and Truth-Seeking:
• Skepticism focuses on asking, Why might this not be true? rather than Why is this true?
• Engage in exploratory thought by considering alternative hypotheses, testing opposing viewpoints, and evaluating beliefs critically.
• Avoid biases by encouraging diversity of opinion and fostering accountability within decision-making groups.
Practical Tools and Techniques
1. Scenario Planning:
• Map out potential futures, assign probabilities, and prepare strategic responses for various outcomes.
• Benefits include acknowledging uncertainty, preparing for responses, reducing unproductive regret, and avoiding biases like resulting and inside bias.
2. Backcasting and Premortems:
• Backcasting: Work backward from a desired goal to identify actions and strategies that could lead to success.
• Premortems: Imagine failure, then identify reasons it might occur. Use this to proactively address potential obstacles.
• Combining these methods—mental contrasting—improves the likelihood of achieving goals.
3. 10-10-10 Strategy:
• Consider the consequences of a decision in 10 minutes, 10 months, and 10 years to counteract temporal discounting and promote long-term thinking.
4. Outcome-Blind Analysis:
• Deconstruct decisions before knowing the outcomes to avoid bias.
• Create decision trees and focus on improving processes rather than judging by results alone.
5. Pre-Commitments:
• Use contracts or accountability mechanisms to pause for deliberation during emotionally charged moments.
• Pre-commitment ensures focus on long-term goals and prevents impulsive choices.
Improving Decision-Making:
• Develop habits around accurate self-critique, admitting mistakes, and giving credit to others.
• Focus on factors within your control while letting go of those outside your influence.
• Build self-correcting epistemic communities that prioritize accuracy, truth-seeking, and diverse perspectives.
Key Takeaways:
• Decisions are bets on the future, made with incomplete information and influenced by randomness.
• Success comes from improving decision processes, not guaranteeing outcomes.
• By combining tools like backcasting, premortems, scenario planning, and accountability structures, you can increase the quality of your decisions and reduce cognitive biases.
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RamonaReviewed in Germany on November 19, 20245.0 out of 5 stars Super
Schnelle Lieferung, das Buch ist unbeschädigt angekommen. Ich bin rundum zufrieden
Guillaume RReviewed in the United Kingdom on January 1, 20245.0 out of 5 stars One of the best on trading psychology out there
Yes you read that right the author is a pro poker player. However in every single sentences the word power is mentioned you could easily replace it with trading. The similarities are striking. The mental model provided and insight is very useful for traders. You can have ‘one good trade’ with perfect execution and still get a bad outcome. It doesn’t mean that the trade was bad. 10/10








