Ever wondered how the world of poker could teach you to make better life decisions? From the infamous Super Bowl decision of Seahawks coach Pete Carroll, to the cognitive traps explored in Daniel Kahneman's Thinking, Fast and Slow, and even the high-stakes gamble of John Johnny World Hennigan's move to Des Moines, Iowa - how can these stories help us improve our own decision-making? Learn how embracing uncertainty, redefining 'wrong', and treating decisions as bets can lead you to a more rational, successful life.

Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts

In Super Bowl XLIX, Seahawks coach Pete Carroll made a controversial call to pass instead of handing the ball to Marshawn Lynch. The pass was intercepted, costing the Seahawks the game and subjecting Carroll to intense criticism. 

Headlines branded it the "worst play call in NFL history." But, as analysts from FiveThirtyEight and Slate argued, the decision had sound reasoning behind it, including clock management and game theory. The criticism Carroll faced is a classic example of "resulting"—judging a decision solely by its outcome rather than its quality.

Resulting is a common cognitive trap, where we equate the quality of decisions with their outcomes. Carroll’s situation mirrors that of a CEO who regretted firing his company president due to subsequent poor performance, despite having made a well-reasoned decision. This tendency to link results with decision quality can lead to irrational decision-making, a concept extensively studied in behavioral economics.

Our brains evolved to create order and certainty, which served our ancestors well but often misleads us in modern decision-making. Daniel Kahneman's "Thinking, Fast and Slow" and Gary Marcus’s "Kluge" describe how our reflexive and deliberative systems conflict, often leading to irrational choices. In poker, where decisions must be made quickly with incomplete information, players develop strategies to avoid these cognitive traps, making poker a valuable metaphor for real-life decision-making.

John von Neumann, a pioneer of game theory, modeled his theories on poker rather than chess. Unlike chess, which has perfect information and little luck, poker involves hidden information and significant uncertainty, akin to real-life decisions. The challenge is to separate decision quality from luck, a task that poker players must master to succeed.

Von Neumann’s insights highlight the importance of understanding uncertainty and the probabilistic nature of decisions. In life, like poker, we must make peace with "I'm not sure" and focus on making the best possible decisions with the information available. This approach helps avoid the pitfalls of hindsight bias and resulting, leading to better decisions and more rational thinking.

Embracing uncertainty and redefining "wrong" are crucial steps. A decision isn't wrong just because it leads to a poor outcome, nor is it right solely because it succeeds. Understanding this can improve our decision-making and reduce the emotional turmoil associated with unpredictable results. As poker players know, the quality of our decisions should guide our actions, not just their outcomes.

Could Pete Carroll's Super Bowl Call Teach Us About Better Decision-Making?

In the 1990s, John Hennigan, known as "Johnny World," moved to Las Vegas from Philadelphia. With a reputation for betting on anything and exceptional skills in poker and pool, he quickly became a fixture in high-stakes games, earning millions in prize money. However, the nocturnal and isolated lifestyle of a professional gambler began to wear on him.

One night, during a poker game, the conversation turned to Des Moines, Iowa—a far cry from Vegas. The players joked about how out of place John would be in such a quiet, gambling-free environment. This led to a bet: Could John live in Des Moines for a month? They agreed on $30,000, with the condition that John had to stay on one street with limited amenities and a 10 p.m. shutdown. John negotiated for one concession: access to a nearby golf course.

John took the bet and moved to Des Moines the next day. Within just two days, he was desperate to return to Vegas and tried to negotiate his way out, offering to pay $15,000 to end the bet. The other players refused, enjoying the spectacle of John's misery. Eventually, John paid $15,000 to escape the bet.

This tale of John Hennigan's brief and torturous stay in Des Moines illustrates the broader concept of decision-making as betting. Like John's decision, our life choices—whether moving for a job or deciding what to eat—are bets on our future happiness and success. We weigh alternatives, risks, and rewards, often without realizing it.

Interestingly, research shows that our beliefs heavily influence our decisions. We tend to believe information we hear without vetting it and stick to these beliefs even when presented with contrary evidence. For instance, studies have shown that people remember false statements as true, especially under cognitive load. This stubbornness in updating beliefs can lead to poor decision-making, as seen in the enduring myth that low-fat diets are healthier despite evidence to the contrary.

Moreover, smarter individuals are not immune to this bias; they are often better at rationalizing their beliefs rather than objectively analyzing new information. This is evident in studies where individuals interpreted the same data differently based on their pre-existing beliefs, such as opinions on gun control.

To counteract this, a simple yet powerful tool is to frame decisions as bets. When someone challenges us with "Wanna bet?" it forces us to scrutinize our beliefs and consider the evidence more carefully. This mindset encourages us to express our confidence in our beliefs probabilistically, making us more open to new information and less likely to cling to outdated or incorrect views.

By treating decisions as bets and acknowledging the inherent uncertainty in our beliefs, we can make better, more informed choices—just as poker players do. This practice not only helps in personal decision-making but also fosters a more collaborative and truth-seeking approach in our interactions with others.

So, next time you find yourself certain about a belief or decision, ask yourself, "Wanna bet?" It might just lead you to a more accurate and beneficial outcome.

Johnny World's $30,000 Des Moines Challenge: Betting on Beliefs

When Annie Duke first started playing poker in 1992, she lived in a tiny Montana town and made a daily 40-mile trek to Billings to play in the smoky basement of the Crystal Lounge. There, amidst cowboy hats and cigars, she met Nick the Greek, a quirky player who believed the weakest hand—a seven and a deuce—was the best because it surprised opponents. 

Despite his losses, Nick never changed his strategy, attributing his failures to bad luck and his wins to skill. His inability to learn from his outcomes fascinated Annie and highlighted the importance of learning from feedback.

In poker and life, outcomes are like feedback, teaching us to distinguish between luck and skill. For instance, losing weight might result from diet changes (skill) or a metabolic shift (luck). Misdiagnosing the cause of an outcome, like the SnackWell’s cookie craze that misled people into gaining weight, shows how tricky it is to learn from experiences.

Our tendency to blame bad outcomes on luck and take credit for good ones, known as self-serving bias, hampers learning. This bias isn’t just in poker; it’s everywhere. For example, in the infamous Bartman play during the 2003 Cubs game, fans blamed Steve Bartman for the team’s loss, ignoring the bad luck and subsequent game errors outside his control.

Learning from others can also be biased. We often blame others for their failures and attribute their successes to luck. This mindset, driven by ego and competition, can stifle compassion and learning. To overcome this, we should shift our habits, like poker pro Phil Ivey, who constantly seeks to learn from his mistakes even after winning.

Changing habits involves recognizing cues, routines, and rewards. By substituting self-serving routines with truth-seeking ones, we can field outcomes more objectively. Treating outcome assessments as bets pushes us to consider alternative explanations and take perspectives, reducing bias.

Thinking in bets helps us learn from experience, fostering a mindset that values accuracy over ego. While it’s challenging, even small improvements in decision-making compound over time, leading to significant benefits. With practice and support, we can reshape our habits, aligning our decisions with our long-term goals.

Can Poker Legend Phil Ivey Teach Us to Overcome Self-Serving Bias in Life?

Lauren Conrad, star of MTV's "The Hills," experienced an unexpected grilling during her 2008 interview on the Late Show with David Letterman. What started as a promotional chat turned into an uncomfortable moment when Letterman suggested that Conrad might be the source of her own drama. This comment, while perceptive, was not well-received, highlighting how truth-seeking requires a mutual agreement—something Letterman failed to secure.

This concept aligns with the idea of the "buddy system," where having a partner can help us navigate life's complexities. In poker, for example, engaging with a group of skilled players who challenge our thinking can significantly improve decision-making. Annie Duke's brother and his friends, including poker legend Erik Seidel, formed a learning pod that pushed Annie to analyze her strategic decisions instead of blaming luck.

The importance of a truth-seeking group is reminiscent of the choice Neo faces in "The Matrix"—take the red pill for harsh truths or the blue pill for comforting illusions. Opting for truth, like Neo, requires a support system to handle the discomfort that comes with it.

A well-structured decision group functions like Alcoholics Anonymous, which helps members overcome addiction through mutual support. However, for a group to be effective, it must avoid echo chambers and promote diverse perspectives. Social psychologists and even federal judges have shown that groupthink can hinder objective decision-making.

Jon Haidt's Heterodox Academy addresses this by fostering ideological diversity in academia, emphasizing that differing viewpoints are crucial for robust scientific inquiry. Similarly, betting markets in scientific research have demonstrated that financial stakes can improve the accuracy of expert predictions.

Ultimately, forming a decision group with a clear charter focused on accuracy, accountability, and diversity can help us make better choices. This approach, modeled by successful poker strategies and scientific practices, underscores the value of collective truth-seeking in navigating life's bets.

Lauren Conrad's Unscripted Moment: Letterman's Truth Bomb & The Power of Collective Wisdom

Robert K. Merton, born Meyer R. Schkolnick, began his journey as a teenage magician before becoming one of the most influential sociologists of the 20th century. His groundbreaking work laid down the CUDOS norms—Communism, Universalism, Disinterestedness, and Organized Skepticism—essential principles for fostering a self-correcting scientific community. His life and work offer valuable insights for anyone seeking to create truth-seeking groups.

Merton's norm of "Communism" emphasizes communal ownership of data, advocating for open sharing to ensure accuracy and objectivity. This principle is essential not just in science but in any decision-making group, as demonstrated by a CEO who, after sharing extensive details about his decision to fire an executive, realized the decision was strategically sound despite its unfavorable outcome.

"Universalism" teaches us to evaluate ideas based on their merit, not their source. Merton’s principle helped poker player Annie Duke learn from players she initially dismissed as "bad." By finding value in their strategies, she improved her game, illustrating that good ideas can come from unexpected places, including political opposites.

"Disinterestedness" is about recognizing and mitigating conflicts of interest. A historical example involves a 1967 Harvard study, funded by the sugar industry, which wrongly blamed fat for heart disease. This biased research highlights the importance of transparency and the need to evaluate information without preconceived notions.

Finally, "Organized Skepticism" encourages us to question and test our beliefs. This principle can be operationalized in various ways, such as assigning a "devil's advocate" to argue against prevailing opinions or creating anonymous channels for dissent within organizations.

Merton's principles can also be applied beyond formal groups. Simple strategies like expressing uncertainty, leading with agreement, and focusing on future improvements can foster truth-seeking conversations in everyday interactions. These methods help navigate the complexities of human bias, ensuring that we make more informed and rational decisions.

How Did a Teenage Magician Turn Into One of the 20th Century's Most Influential Sociologists?

Imagine Marty McFly running into himself. Thanks to "Back to the Future", we all know the number one rule of time travel: don’t meet yourself! Doc Brown warns that such an encounter could unravel the space-time continuum. Yet, in real-life decision-making, meeting past or future versions of ourselves can actually be beneficial.

Picture Jean-Claude Van Damme in "Timecop" where past and future selves collide disastrously. In reality, bringing our past and future selves into our decision-making processes helps us avoid in-the-moment thinking, which can be short-sighted and impulsive. Poker players, for instance, must constantly make quick decisions with immediate consequences, teaching them to integrate long-term strategy into every move.

Jerry Seinfeld humorously explains why he doesn’t get enough sleep: “Night Guy” wants to stay up late, leaving “Morning Guy” to deal with the exhaustion. This is a prime example of temporal discounting—favoring immediate rewards over future benefits. A study on military retirement decisions in the 1990s showed that many took lump-sum payments at a significant discount, showcasing this tendency.

To counteract this, new technologies allow us to “meet” our future selves. Apps like Merrill Edge’s “Face Retirement” show us aged versions of ourselves, encouraging better financial decisions today by connecting us with our future needs. Research by Stanford’s Jeremy Bailenson and Laura Carstensen demonstrated that seeing an aged version of oneself led people to allocate more money to retirement savings.

Moving regret in front of our decisions helps, too. If we could regret a choice before making it, we might avoid bad outcomes. This is akin to the loss limits in poker, where players precommit to stopping after losing a certain amount, thereby avoiding further irrational decisions.

Consider a flat tire on a rainy night. In the moment, it feels like the worst thing ever. But a year later, it’s just a story. This perspective helps us avoid overreacting to immediate events. Poker players call this “tilt”—emotional reactions that compromise decision-making. Recognizing tilt, they employ strategies like taking a break or asking themselves future-oriented questions to regain perspective.

Ulysses contracts—named after the hero who had himself tied to a mast to resist the Sirens’ song—are precommitments that help us act more rationally. For instance, setting up automatic retirement contributions or deciding in advance on a maximum bid for a house.

By learning to time travel mentally, we can better align our present actions with our long-term goals, making more rational decisions and ultimately leading happier, more successful lives.

Time Travel Wisdom: Lessons from Marty McFly, Van Damme, and Seinfeld for Better Decision-Making

Picture this: you’re on the verge of making a big decision, but instead of rushing in, you have a moment to pause and reflect, thanks to a "decision swear jar." Just like a regular swear jar that makes you mindful about cursing, a decision swear jar helps you catch and reconsider your knee-jerk reactions and irrational thoughts. 

It could be as simple as noticing when you say, "I’m sure" or "I knew it," which might signal overconfidence or an illusion of certainty. By doing this, you create a stop-and-think moment that encourages more rational decision-making.

This strategy is akin to the meticulous preparation seen in military operations. Take Operation Overlord, the D-Day invasion, for instance. Despite facing numerous challenges—bad weather, miscommunications, and off-course paratroopers—the success of the Normandy landings was due to thorough reconnaissance and planning for various scenarios. Similarly, Navy SEALs wouldn't dream of raiding a compound without knowing the layout and potential obstacles.

This kind of forward-thinking is not only crucial in military contexts but also in everyday decision-making. Imagine you're a poker player, constantly weighing the probabilities of different outcomes based on your opponents' possible moves. This mental exercise of considering possible futures and their probabilities helps you make more informed bets.

Take it from After-School All-Stars (ASAS), a nonprofit founded by Arnold Schwarzenegger. They improved their budgeting by estimating the likelihood of winning various grants, which led them to prioritize more effectively and plan their finances more realistically. They shifted from a chaotic, seat-of-the-pants approach to one grounded in scenario planning, which increased their chances of securing funding and achieving their goals.

Now, let's talk about backcasting and premortems. Backcasting involves imagining a future where you've achieved your goals and figuring out the steps that got you there. Conversely, a premortem has you envisioning why you failed to reach your goals, identifying potential obstacles that could derail your plans. Both methods help in building a more realistic and comprehensive strategy.

For instance, while planning a trial, a lawyer might imagine a favorable verdict and work backward to determine the key actions and decisions that led to that outcome. Similarly, they could conduct a premortem to anticipate unfavorable rulings or unsympathetic jurors, allowing them to better prepare for these challenges.

The power of these techniques is supported by research from Gabriele Oettingen, who found that people who imagine obstacles are more likely to achieve their goals. Whether it's losing weight, acing an exam, or landing a job, considering the hurdles makes you more prepared and motivated to overcome them.

Even in high-pressure situations, like Pete Carroll's controversial Super Bowl call, scenario planning can reveal hidden advantages. His decision to pass instead of run, although criticized, was based on a strategy that accounted for multiple outcomes and probabilities, offering more chances to score.

Ultimately, keeping a balanced perspective on future possibilities, both positive and negative, helps us make better decisions. It allows us to prepare for a wider range of outcomes, reducing the element of surprise and regret when things don’t go as planned. By maintaining a realistic view of the future, we can improve our decision-making process and ultimately, our chances of success.

Could Decision Swear Jar Transform Your Life Choices?

The notion of "resulting" is a cognitive trap where we equate the quality of decisions with their outcomes. This can often lead to irrational decision-making. We should separate decision quality from luck and understand the uncertainty and probabilistic nature of decisions. Our actions shouldn't be guided solely by their outcomes but by the quality of our decisions. 

Our life choices are bets on our future happiness and success. However, our beliefs heavily influence our decisions, often without us realizing. Framing decisions as bets encourages us to express our confidence in our beliefs probabilistically, making us more open to new information and less likely to cling to outdated views.

Learning from experiences is crucial. Changing habits involves recognizing cues, routines, and rewards. By substituting self-serving routines with truth-seeking ones, we can respond to outcomes more objectively. Forming a decision group with a clear charter focused on accuracy, accountability, and diversity can help us make better choices.

Incorporating our past and future selves into our decision-making processes helps us avoid in-the-moment thinking, which can be impulsive. Precommitments, such as setting up automatic retirement contributions or deciding in advance on a maximum bid for a house, can help us act more rationally.

A "decision swear jar" can help us catch and reconsider our knee-jerk reactions and irrational thoughts, encouraging more rational decision-making. Forward-thinking, backcasting and premortems are useful techniques in building a more realistic and comprehensive strategy. By maintaining a realistic view of the future, we can improve our decision-making process and our chances of success.

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Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts

Annie Duke

8 Key ideas

24 MINS

4.4 (1.9k)

Ever wondered how the world of poker could teach you to make better life decisions?

Learn how embracing uncertainty, redefining 'wrong', and treating decisions as bets can lead you to a more rational, successful life.