Thinking in Bets summary

We all want to make good decisions. But saying, “I believe X to be the best option” first requires good-quality beliefs. Good-quality beliefs are ideas about X that are informed and well thought-out. But we can’t expect to form good-quality beliefs with lazy thinking. Instead, we have to be willing to do some work in the form of truth-seeking. That means we have to strive for truth and objectivity, even when something doesn’t align with the beliefs we hold.

Unfortunately, truth-seeking runs contrary to the ways we’re naturally wired. For our evolutionary ancestors, questioning new beliefs could be dangerous, so it was low priority. If you hear a lion rustling in the grass, for example, you’re less likely to stop and analyze the situation objectively, and more likely to just run!

The best way to learn is often by reviewing our mistakes. Likewise, if we want to improve our future outcomes, we’ll have to do some outcome fielding. Outcome fielding is looking at outcomes to see what we can learn from them.

Some outcomes we can attribute to luck and forget about – they were out of our control anyway. It’s the outcomes that seem to have resulted primarily from our decisions that we should learn from. After analyzing those decisions, we can refine and update any beliefs that led to our initial bet.

Phil Ivey is one of the best poker players in the world. He’s admired by his peers and has been incredibly successful in every type of poker. One big reason for this? Phil Ivey has good habits.

Habits work in neurological loops that have three parts: cue, routine and reward. As Pulitzer-prize-winning reporter Charles Duhigg points out in his book The Power of Habit, the key to changing a habit is to work with this structure, leaving the cue and reward alone but changing the routine.

We’ve all got blind spots, which makes truth-seeking hard. But it’s a little easier when we enlist the help of a group. After all, others can often pick out our errors more easily than we can.

But to be effective, a group dedicated to examining decisions isn’t like any other. It has to have a clear focus, a commitment to objectivity and open-mindedness, and a clear charter that all members understand.

Shared commitment and clear guidelines help define a good-quality decision-examining group. But once you’ve got that group, how do you work within it?

You can start by giving each other CUDOS.

Comedian Jerry Seinfeld describes himself as a “Night Guy.” He likes to stay up late at night and doesn’t worry about getting by on too little sleep. That’s Morning Jerry’s problem, not Night Jerry. No wonder Morning Jerry hates Night Jerry so much – Night Jerry always screws him over.

It’s a funny description, but temporal discounting – making decisions that favor our immediate desires at the expense of our future self – is something we all do.