EP.22: HOW TO THINK IN BETS: ANNIE DUKE ON POKER, PROBABILITIES AND BETTER DECISIONS

We’ve all had that experience of expressing something with certainty…and someone says “wanna bet?” and immediately it brings to the fore the fact that whenever you declare something you believe to be true, or a prediction, that there’s risk in that – Annie Duke

All decisions have risk/ reward trade-offs. You have to make choices that have costs yet, many factors involved in making those choices are often hidden

So how do you make good decisions in the face of uncertainty?

These are challenges inherent in the game of poker, and in poker, as in life, there is a difference between good decisions and good outcomes.

On this podcast, my guest is Annie Duke. For two decades she was one of the top poker players in the world. She holds a World Series of Poker (WSOP) gold bracelet and the 2004 World Series of Poker Tournament of Champions and the National Heads-Up Poker Championship in 2010.

Before becoming a professional poker player, Annie was awarded a National Science Foundation Fellowship to study cognitive psychology at the University of Pennsylvania. She now spends her time writing, consulting and speaking on topics such as decision fitness and embracing uncertainty.

In her new book, “Thinking In Bets” Annie reveals lessons cultivated by combining her academic studies in cognitive psychology with real-life decision-making experience at the poker table, which is the topic of this podcast.

This conversation is indeed about better decision-making, but that encompasses a great deal. It’s also about equanimity, how to be objective in the face of bad outcomes – while developing skill to influence better outcomes.

This is also how resilience is developed, using outcomes – good or bad – as a feedback loop.

I think that the outcome anchors us so heavily that we can’t see that there’s lots of other stuff by which we can determine whether a decision was good – Annie Duke

Annie say we are all “outcome junkies” and the more we wean ourselves from that addiction, the happier we’ll be. We aren’t guaranteed favorable outcomes but we can always make good bets.

A lot has been written about the benefits of shifting from a results only orientation to a process orientation but Annie tells you how actually to do that.

Wanna bet?

If you want clarity on a decision you need to make, place a hypothetical bet on it.  Let’s say you have $10K in chips and there is another $10K in the pot (up to win). How much of your money would you bet on the outcome you’re predicting? 10%? Half? All? Make your bet.

don’t be don’t be scared of assigning the probability because it doesn’t need to be exact …trust me the probability exists, and if you’re not trying to get the answer (the probability) You’re just kind of ignoring it.

I had a great time talking with Annie, and think you’ll really enjoy this episode.

Here’s some of what we talk about on this show.

  • How she went from academia to poker
  • Her introduction to decision strategy
  • Some great betting stories (Ira the Whale)
  • “Resulting”
  • The worst call in history?
  • Cognitive bias / why we make bad decisions
  • Nate Silver and the Trump election
  • Probabilities / predictions
  • Defining failure
  • Time travel thought experiments
  • What being wrong / right really means
  • How to use betting to make better decisions in life

Whether it’s career, business or relationships our lives are the sum total of our decisions to this point. I would listen to this podcast and reflect on whether you’ve made good decisions or whether you’ve just been very lucky so far – and then learn how to make better ones.

Enjoy!

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