Thinking in Bets

4 mins

In Thinking in Bets, a former World Series of Poker champion Annie Duke explains how lessons from poker can help us make better decisions.

As lawyers, we don’t often think about decision-making quality or frameworks. We often use our “gut feel” or past experience when making decisions.

When asked how we reached a particular conclusion, we often start by looking for examples in support. We do this by:

  • self-referencing our own experiences (problem: a sample size of 1); or
  • finding a judgment that supports our conclusion (problem: confirmation bias).

In other words, we can fall into lazy thinking by weaving a story that suits our preferred narrative—reverse engineering at its best.

As a judge’s associate, you enjoy a fly-on-the-wall experience. This includes observing how parties on opposing sides dig their heels in even on points they can’t convince the judge of. Even the best practitioners can lose perspective on the strengths and weaknesses of their own case at trial. For example, when a barrister tries to explain away every defect of their client while not quite convincing anyone—and in spite of obvious hint-dropping from the presiding judge that the explanation is rather… well, crap.

This sort of reverse-engineering can be a problem when developing a good litigation strategy. Everyone knows that a trial results in a clear win/lose outcome, subject to the parties settling. However, there are numerous decisions that one can take in the lead-up to the outcome, including which points you should keep or drop to construct the most persuasive case possible.

Le poker book

This is where Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts comes in. The book raises some (often obvious) but important points on how to make better decisions using probabilistic thinking. It also makes observations that:

  • real life is less like chess and more like poker—you don’t always (and may never) have information about another player’s hand;
  • we should be wary of the idea that outcomes are good signals for decision quality; and
  • it can take time for decisions to play out in the long-run.

Here are some of the tools that Annie suggests we should use to make better decisions:

#1. You need information

An obvious premise—you can’t make good decisions if you don’t have information or ways of sharing it.

On a personal level, we can get better at learning and self-improvement through “truth-seeking”, by forming groups with people who are happy to tell you the truth about you (a tough task).

On a societal level, Annie notes that freedom of information legislation is one way that citizens can obtain information about their government—which in turn allows them to make electoral decisions.

Finally, as most would know, any organisation with a culture of information-hoarding rather than sharing is more likely to breed distrust—and poor decision-making.

#2. Play devil’s advocate

You get your best shot at accurate decision-making when there is a diversity of opinion and a good dose of skepticism.

Annie suggests that if two people disagree on the likelihood of an outcome, they should switch sides and argue the other’s position. This is likely to lead to an answer somewhere in the middle—with both people moderating their position.

This is where the adversarial approach in litigation has some value in “truth-seeking”.

#3. Use decision trees

Also known as “scenario planning”, this exercise involves mapping out a range of potential futures.

One suggestion is that instead of using data to make a particular conclusion, take the “approach of discussing all scenarios the data could support”. Then assign probabilities to each scenario based on your best guess on how likely it might happen.

Annie notes that the whole point of this exercise is to “move away from the extremes of 0% or 100%”, in other words, complete certainty.

#4. Look forward and backward in time

One way of thinking about decisions is to use the 10-10-10 rule.

Before making a decision, think, “What are the consequences of each of my options:

  • … in 10 minutes?
  • … 10 months?
  • … 10 years?”

Then do the opposite, “If I don’t take this particular option, would I regret it if I look back:

  • … 10 minutes?
  • … 10 months?
  • … 10 years?”

#5. Know your emotions

If you ask any litigator about how their client feels at the start of their case and towards the end—it is no surprise that the parties usually settle once they cool their hot heads.

It’s not only because they have better information (through the exchange of key documents in discovery and an understanding of the judge’s sentiment), but because most people realise that life is too short to litigate.

On this point, Annie notes that it’s just as important to know when not to make a decision:

“… our in-the-moment emotions affect the quality of the decisions we make in those moments, and we are very willing to make decisions when we are not emotionally fit to do so.” — page 196

#6. Have a “Ulysses Contract”

This refers to Odysseus of Greek mythology, who ordered his men to plug their ears with beeswax and tie him to the ship’s mast so that he could listen to the Sirens’ song without endangering the ship.

In other words, have a plan for something you expect will happen in the future, i.e. “if this, then that”. It can apply to dealings with known difficult people—spot the signs of your anger rising, deep breath in and out, then respond. It can also apply to a vast range of other situations in this thing we call #life.

In conclusion

Annie cautions that no decision-making tool can “turn us into perfectly rational actors”. We will often fall prey to hindsight and confirmation bias, amongst other things.

However, in a world where people obsess about always being right, it’s refreshing to hear a poker player acknowledge that it’s totally OK to say “I’m not sure”.

Now for the shortcomings of Thinking in Bets. Despite the sexy book title, it fails largely on execution. This is mainly due to the author’s excessive self-referencing, obscure notes on sporting events/people that only Americans can understand, and a very cursory exploration of supporting evidence.

It is unfortunate that a book that promises so much can be summarised so easily above (without having to read all 231 pages).

If you’re looking for a more methodical book on decision-making frameworks, check out The Decision Book: Fifty Models for Strategic Thinking by Mikael Krogerus and Roman Tschäppeler.