Thinking in Bets

Resulting means judging the quality of a decision based on the quality of the result.

Our tendency is to equate the quality of a decision with the quality of its outcome. The prevents us from accurately assessing the quality of our decisions and the role of luck in the outcomes we achieve.

Life is not like chess. Chess contains no hidden information and very little luck.

Life is more like poker. You could make the smartest, most careful decision and still have it blow up in your face.

A bet is a decision about an uncertain future. Thus, most of the decisions in your life – switching jobs, choosing a partner, selecting your field of study, not doing something – are bets.

They’re choices that you make in the face of an uncertain future.

This is how we think we form our beliefs:

• We hear something
• We think about it and then determine whether if it is true or false
• We form our belief

This is how we actually form our beliefs:

• We hear something
• We believe it to be true
• Only sometime later, if we have the time or the inclination, we think about it and then determine whether it is true or false

Our pre-existing beliefs influence the way we see the world and the way we make decisions.

People are better at recognizing biased reasoning in others but are blind to bias in themselves. 

• Being smart can actually make bias worse. Blind-spot bias is worse the smarter you are.
• Being smart and aware of your capacity for irrationality alone doesn’t help you refrain from biased reasoning.

Even when people experience the same event at the same time, if you ask them about it, you will often get two very different accounts about what happened.

That’s because the way we interpret the world is not only a function of the objective experience but includes how we see and choose to understand the world.

It is important to have a go-to group of people with a common interest in thinking in bets.

The characteristics of a good group to practice truth-seeking with:

• A focus on accuracy (over confirmation), which includes rewarding truth-seeking, objectivity, and open-mindedness within the group
• Accountability for which members have advance notice
• Openness to a variety of ideas

Once we are a part of a group that regularly reinforces exploratory thought, the routine becomes reflexive, running on its own.

• Express uncertainty: If we start by making clear our uncertainty, our audience is more likely to understand that the discussion held does not always have to be about right or wrong but about openness to different perspectives.
• Lead with assent: Everyone likes to be affirmed. Avoid the language of no. Use ‘and’ more than you use ‘but’ in an expression of possibly polarizing ideas
• Ask for temporary agreement: Whenever one is offloading emotion to us, we can ask them if they are looking to vent or if they are looking for advice
• Focus on the future,  rather than rehearsing what has happened.

Scenario planning is a productive skill to develop in decision making because:

• It reminds us that the future is uncertain, giving a more realistic view of the world
• It prepares us for how to respond to different outcomes that might respond from our initial decisions
• Anticipating the range of outcomes keeps us from unproductivity regret
• By mapping out potential outcomes & probabilities, we are less likely to fall prey to resulting or hindsight bias.