A hand of poker takes about two minutes. Over the course of that hand, I could be involved in up to twenty decisions. And each hand ends with a concrete result: I win money or I lose money. The result of each hand provides immediate feedback on how your decisions are faring. But its a tricky kind of feedback because winning and losing are only loose signals of decision quality. You can win lucky hands and lose unlucky ones. Consequently, its hard to leverage all that feedback for learning.
The promise of this book is that thinking in bets will improve decision-making throughout our lives. We can get better at separating outcome quality from decision quality, discover the power of saying, Im not sure, learn strategies to map out the future, become less reactive decision-makers, build and sustain pods of fellow truthseekers to improve our decision process, and recruit our past and future selves to make fewer emotional decisions.
Thinking in bets starts with recognizing that there are exactly two things that determine how our lives turn out: the quality of our decisions and luck. Learning to recognize the difference between the two is what thinking in bets is all about.
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 didnt turn out well in the short run.
Take a moment to imagine your best decision in the last year. Now take a moment to imagine your worst decision. Im 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 isnt just something we do from afar.
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.
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.
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.
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.
Our deliberative capacity is already maxed out. We dont 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.
The challenge is not to change the way our brains operate but to figure out how to work within the limitations of the brains we already have. Being aware of our irrational behavior and wanting to change is not enough, in the same way that knowing that you are looking at a visual illusion is not enough to make the illusion go away.
Our goal is to get our reflexive minds to execute on our deliberative minds best intentions.
Poker players have to make multiple decisions with significant financial consequences in a compressed time frame, and do it in a way that lassoes their reflexive minds to align with their long-term goals.
This means a poker player makes hundreds of decisions per session, all of which take place at breakneck speed.
Every hand (and therefore every decision) has immediate financial consequences.