Making Smarter Decisions When You Don’t Have All the Facts
Author: Annie Duke
Length: 276 pages
Date read: 8/3/2019
My rating: 5/5
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Wanna Bet? The ultimate challenge – risking your money on the outcome of a decision. As a former professional poker champion, Annie Duke argues that poker is a metaphor for life. Life – a series of decisions for which you don’t have all the information. Success and happiness (in poker and in life) come from making better decisions.
Readability – 5/5
Very Readable. Annie’s personal story around what led to a professional poker career pulled me in right away. Full of effective, easy to consume parables and analogies, along with short, digestible sections within each chapter. I felt as though each chapter offered something more valuable than the last.
You might enjoy this book if…
You’re open to thinking differently about decisions and learning strategies to improve your success and happiness.
- Zoom out on your overall happiness. If your happiness is the stock market, don’t just focus on the ups and downs of a single day or week. Look at the long-term return over the years and decades. Is it an upward trend?
- Diverse viewpoints within a group allow for more accurate truth-seeking.
- Decisions aren’t black and white (100% or 0%), they’re shades of gray. Betting (or identifying probabilities of outcomes) helps navigate the nuanced gray area of a decision.
- You can use probability to estimate the true cost or reward of a decision. Duke illustrates the point with the example of ASAS, a non-profit company that depends on grants for funding. “If they applied for a $100,000 grant that they would win 25% of the time, that grant would have an expected value of $25,000 ($100,000 × .25).” If they apply for another grant that’s worth $50,000 and has a win probability of 80%, it would have an expected value of $40,000 ($50,000 × .80). After factoring in probabilities, the $50,000 grant is actually worth more than the $100,000 grant ($40,000 versus $25,000). Therefore, they should prioritize applying for the $50,000 grant.
- Backcast. Identify the desired outcome “and work backward from there to ‘remember’ how we got there.”
- Don’t shoot the messenger. Also, don’t give the messenger flowers. “When we have a negative opinion about the person delivering the message, we close our minds to what they are saying and miss a lot of learning opportunities because of it. Likewise, when we have a positive opinion of the messenger, we tend to accept the message without much vetting. Both are bad.”
- Analyze your wins as well as your loses. Ignore the outcome.
- “We form beliefs without vetting most of them, and maintain them even after receiving clear, corrective information.”
- “The Internet is a playground for motivated reasoning. It provides the promise of access to a greater diversity of information sources and opinions than we’ve ever had available, yet we gravitate toward sources that confirm our beliefs, that agree with us. Every flavor is out there, but we tend to stick with our favorite.”
My favorite part of the book
The Night Jerry vs Morning Jerry analogy. Jerry Seinfeld’s bit about why he doesn’t get enough sleep illustrates “the tendency we all have to favor our present-self at the expense of our future-self.” Night Jerry always wants to stay up late at the expense of Morning Jerry who has no say in the matter. Duke points out, “Saving for retirement is a “Night Jerry–versus–Morning Jerry problem.” In order to solve this problem, we need our “aged, wrinkly [future] self colliding with us when we decide between spending more money now on something like a nicer car versus saving more money for retirement.”
Why did I read this book?
I listened to an episode of Peter Attia’s podcast The Drive in which he interviews Annie Duke. Their discussion around Super Bowl XLIX and Seahawks coach Pete Carroll’s decision to call a pass play at the end of the game is what drew me in.
What other books did this inspire me to read?
- The Half-Life of Facts – by Samuel Arbesman.
- Ignorance – by Stuart Firestein
Life, like poker, is one long game, and there are going to be a lot of losses, even after making the best possible bets.-Annie Duke