Thinking in Bets - What You Need to Know
Life is not a game of chess.
In chess, a game is won on a series of good decisions.
In life, good decisions can lead to worse outcomes.
Life also contains a splash of luck, but comparatively, a novice in a chess game will almost definitely be beaten by the grandmaster.
Life instead, is actually a lot like poker.
We make decisions about uncertain futures all the time, so we can think of them as bets.
In poker, a pair of aces in-hand would objectively be a great bet in many different scenarios.
However, you have to factor in the possibility of someone else holding a better hand, the newbie with beginners luck, our self-sabotaging biases and the guy with the shades who’s an expert at bluffing.
In life, you can make great decisions and still yield bad outcomes.
But to look back and blame that decision would be a form of hindsight bias. Oftentimes, we equate the quality of a decision with the quality of its outcome, and that’s wrong.
Our decision making should be objectively calibrated with new information and experiences, in order to engineer a higher chance of more favourable outcomes.
Think in bets.
This article was inspired by Annie Duke's 'Thinking in Bets'.