Making Smarter Decisions When You Don’t Have All the Facts

By Annie Duke

Life is Poker, Not Chess

• We link results with decisions even though it is easy to point out indisputable examples where the relationship between decisions and results isn’t so perfectly correlated
• We are uncomfortable with the idea that luck plays a significant role in our lives…It feels better for us to imagine the world as an orderly place, where randomness does not wreak havoc and things are perfectly predictable.
• Trouble follows when we treat life decisions as if they were chess decisions. Chess contains no hidden information and very little luck. Pieces can’t randomly appear or disappear from the board or get moved from one position to another by chance. Poker, in contrast is a game of incomplete information. It is a game of decision-making under conditions of uncertainty over time. Valuable information remains hidden. There is also an element of luck in any outcome…Once the game is finished and you try to learn from the results, separating the quality of your decisions from the influence of luck is difficult.
• Physicist James Clerk Maxwell: “Thoroughly conscious ignorance is the prelude to every real advance in science.”
• What makes a decision great is not that it has a great outcome. A great decision is the result of a good process, and that process must include an attempt to accurately represent our own state of knowledge. That state of knowledge, in turn, is some variation of “I’m not sure.” “I’m not sure” does not mean that there is no objective truth. It means that we treat our beliefs as works in progress, as under construction.
• Good poker players + decision makers - try to figure out how unsure they are, making their best guess at the chances that different outcomes will occur.

Wanna Bet?

• By making explicit that our decisions are bets, we can make better decisions and anticipate (and take protective measures) when irrationality is likely to keep us from acting in our best interest.
• In most of our decisions we are not betting against another person. Rather, we are betting against all the future versions of ourselves that we are not choosing.