Life is like a game of poker. Every decision in life has several factors that influence it, with luck playing its part too. The best decisions in life may not always lead to a desirable outcome. Similarly, decisions that seem totally wrong can turn out to be some of the best decisions in life.
But how do we control these variables and make winning decisions in life? In Thinking in Bets, Annie Duke, poker champion turned author, shows
- how the human mind is wired to outcomes
- that outcomes are a combination of skill, luck, and unknown information
- that belief is a developed habit leading to absolute statements
- that changing habituated decision-making can help perceive outcomes objectively
- how to improve decision-making skills by enlisting in decision-examining groups
- the concept of CUDOS
- how to make decisions by analyzing the past, present, and future
The Human Mind is Wired to Outcomes
No one can predict outcomes, just as no one has complete control over all the variables that affect the decisions we make. How does one, therefore, see and analyze mistakes?
No one can claim to have made 100% correct decisions in life, because variables such as luck and unknown information affect outcomes too. Decision-making is, in fact, more like poker bets, where in spite of unknown variables, we make decisions based on, or bet on, outcomes that have a probability to succeed.
The human mind is wired to focussing on outcomes. It confuses the decision made with the resulting outcome. Additionally, it attributes the quality of the outcome to the quality of the decision made – a habit that needs examination and change.
Outcomes are a Combination of Skill, Luck and Unknown Information
Outcomes are a combination of skill, unknown information, and luck. They are subject to self-serving bias. While one can do nothing about unknown information and luck, one can analyze the outcomes resulting from one’s own decisions – both good and bad.
Bad decisions are necessary for improvement too. They help us re-assess and utilize our learnings from those decisions. They help in preventing the same errors in future outcomes. This process of learning from previous outcomes and re-assessment of mistakes in decision-making is called outcome fielding.
Belief is a Developed Habit
Everybody wants to have good outcomes. For that, we need to, at least, be sure that the decision-making involved is good. We need to believe that we are making decisions that could lead to good outcomes. Over time, our beliefs around decision-making lead to certain ways of reasoning and rejection of anything that contradicts these habits. We start making absolute statements about those beliefs.
However, one needs to change this habit. This requires questioning and truth-seeking, a practice that is contrary to how humans are wired from evolutionary times. It is naturally difficult for humans to objectively analyze anything that contradicts their beliefs, even if it will lead to a good outcome. Questioning, keeping an open mind, and truth-seeking help in forming objective perceptions and reduces the resistance to change.
Changing Decision-Making Habits Can Help Us See Outcomes Objectively
The necessity for changing decision-making habits, and to derive good outcomes is similar to how we react to bets. When our decisions and resulting outcomes are challenged, we can start by objectively analyzing our decisions and move beyond self-serving bias that limits our perceptions and resists habit-changing.
Working on understanding that luck also affects outcomes, we can move beyond the resistance of habituated beliefs. This also helps us perceive the mix of luck and skill more objectively and accept that the quality of decisions not necessarily dictates the quality of outcomes.
Improve Decision-Making By Seeking The Wisdom Of Crowds
Changing habits, improving decision-making, and accepting outcomes objectively are not easy tasks. Seeking the help and opinion of a group about decisions made makes habit-changing easier and decision-making better.
When one seeks help from groups for making decisions, it is easier to be objective and open-minded because one can view others’ decisions more objectively. Continuous feedback from a focus group can lead to us seeing beyond our own resistance or self-serving bias.
Seeking the help of decision-examining groups can help only if it is the right group. The working of the group should be clearly defined. Sociologist Merton R. Schkolnick derived a template of guidelines – CUDOS, ideal for a truth-seeking group.
- C is for Communism – All the members in the group examining decisions together must share all information – the good and the bad and strive for transparency. Withholding information increases self-serving bias.
- U is for Universalism – Everyone must use the same standard of evaluation of all information. All decisions, one’s own and others should be viewed objectively to understand and learn how they affect outcomes. Even a bad decision can have valuable lessons for future outcomes.
- D is for Disinterestedness – Disinterest in the outcome helps in focussing on evaluation of decisions. During the evaluation of decisions, if the focus lies on the outcome, then it is easy to form a bias. Bias leads to habit-forming, diluting the need to analyse decisions objectively and as a result, dilutes the learning.
- O and S are Organised Scepticism – This includes holding non-confrontational and organised, sceptical arguments during decision evaluation. Organised scepticism helps us improve our decision-making skills.
Make Decisions by Analysing the Past, Present, and Future
Sometimes, our present decisions often tend to be made at the expense of our future decisions. While one does not do it all the time, one needs to train the mind to consider the impact our present decisions have on future ones. Training to focus on the long term impact of our decisions can be done by –
- Plan future outcomes in the present by evaluating decisions made in the past.
- Think about how our decisions will make us feel in the future. The evaluation of the present decision makes us feel accountable for future outcomes, motivating us to avoid errors in decision-making.
- Think backwards. That is, think of a desirable future outcome to make present decisions, keeping in mind uncertainties. We already know the winning outcome. What must we do today to reach the future we want?
- Pre-mortems are a powerful way to identify potential pitfalls. Premortems imagine failed outcomes and analyze obstacles that could have caused them. This helps in identifying incorrect decisions before they cause a problem in the future.
- Visual contrasting – the process of visualizing obstacles that keep us from meeting the end goal also help us make better decisions.
Key Lessons from Thinking in Bets
Poker bets might not be everyone’s cup of tea; however, they have a very valuable lesson to teach us. Once we start seeing our decisions as mental bets, we can objectively analyze them. Our decision-making habits get easier to change and we start accepting the fact that decisions are not the only yardstick to measure outcomes.