{"product_id":"thinking-in-bets-isbn-9780735216358","title":"Thinking in Bets","description":"\u003cb\u003eNATIONAL BESTSELLER • Poker champion turned business consultant Annie Duke teaches you how to get comfortable with uncertainty and make better decisions as a result in “the ultimate guide to thinking about risk” (Charles Duhigg, author of \u003ci\u003eThe Power of Habit\u003c\/i\u003e).\u003c\/b\u003e\u003cbr\u003e \u003cbr\u003e\u003cb\u003e“A big favorite among investors these days.”—\u003ci\u003eThe New York Times\u003c\/i\u003e\u003c\/b\u003e\u003cbr\u003e\u003cb\u003e \u003c\/b\u003e\u003cbr\u003e\u003cb\u003e“Outstanding.”—Jason Zweig, \u003ci\u003eThe Wall Street Journal\u003c\/i\u003e\u003c\/b\u003e\u003cbr\u003e\u003cbr\u003eIn Super Bowl XLIX, Seahawks coach Pete Carroll made one of the most controversial calls in football history: With 26 seconds remaining, and trailing by four at the Patriots' one-yard line, he called for a pass instead of a hand off to his star running back. The pass was intercepted and the Seahawks lost. Critics called it the dumbest play in history. But was the call really that bad? Or did Carroll actually make a great move that was ruined by bad luck?\u003cbr\u003e\u003cbr\u003eEven the best decision doesn't yield the best outcome every time. There's always an element of luck that you can't control, and there is always information that is hidden from view. So the key to long-term success (and avoiding worrying yourself to death) is to think in bets: How sure am I? What are the possible ways things could turn out? What decision has the highest odds of success? Did I land in the unlucky 10% on the strategy that works 90% of the time? Or is my success attributable to dumb luck rather than great decision making? \u003cbr\u003e\u003cbr\u003eAnnie Duke, a former World Series of Poker champion turned business consultant, draws on examples from business, sports, politics, and (of course) poker to share tools anyone can use to embrace uncertainty and make better decisions. For most people, it's difficult to say \"I'm not sure\" in a world that values and, even, rewards the appearance of certainty. But professional poker players are comfortable with the fact that great decisions don't always lead to great outcomes and bad decisions don't always lead to bad outcomes.\u003cbr\u003e\u003cbr\u003eBy shifting your thinking from a need for certainty to a goal of accurately assessing what you know and what you don't, you'll be less vulnerable to reactive emotions, knee-jerk biases, and destructive habits in your decision making. You'll become more confident, calm, compassionate and successful in the long run.\"A big favorite among investors these days.\" –\u003ci\u003eThe New York Times \u003c\/i\u003e\u003cbr\u003e  \u003cbr\u003e \u003ci\u003e\"\u003c\/i\u003eA compact guide to probabilistic domains like poker, or venture capital... Recommend for people operating in the real world.\" –Marc Andreessen\u003cbr\u003e  \u003cbr\u003e“Outstanding.” –Jason Zweig, \u003ci\u003eThe Wall Street Journal\u003c\/i\u003e\u003cbr\u003e\u003cbr\u003e \"Duke’s discussion is full of wisdom and also of fun, warmth, humor and humanity. Her sharp, data-driven analysis comes with a large lesson, which is that losers should be willing to forgive themselves: Sometimes the right play just doesn’t work.\" –Cass Sunstein, co-author of \u003ci\u003eNudge\u003c\/i\u003e\u003cbr\u003e\u003cbr\u003e\"An elegant fusion of poker-table street-smarts and cognitive science insights. This book will make you both a shrewder and wiser player in the game of life.\" –Philip E. Tetlock, author of \u003ci\u003eSuperforecasting\u003c\/i\u003e\u003cbr\u003e\u003cbr\u003e\"Thinking in Bets offers a compelling, and eminently useful, new way to think about life's decisions. Annie Duke has written an important, and often hilarious, book that will help you understand your own shortcomings--and make smarter choices as a result. You can bet on it.\" –Maria Konnikova, author of \u003ci\u003eThe Confidence Game\u003c\/i\u003e and \u003ci\u003eMastermind\u003c\/i\u003e\u003cbr\u003e\u003cbr\u003e\"The insights Duke offers in this book are incredibly helpful when we contemplate decisions in the face of multiple possible outcomes, and that renders her book enormously applicable to the world of investing.\" –Howard Marks, co-chairman, Oaktree Capital Management and author of \u003ci\u003eThe Most Important Thing\u003c\/i\u003e\u003cbr\u003e\u003cbr\u003e\"Through wonderful storytelling and sly wit, Annie Duke has crafted the ultimate guide to thinking about risk. We can all learn how to make better decisions by learning from someone who made choices for a living, with millions on the line.\" –Charles Duhigg, author of \u003ci\u003eThe Power of Habit \u003c\/i\u003eand \u003ci\u003eSmarter Faster Better \u003c\/i\u003e\u003cbr\u003e\u003cbr\u003e\"Brilliant. Buy ten copies and give one to everyone you work with. It's that good.\" –Seth Godin, author of The\u003ci\u003e Icarus Deception\u003c\/i\u003e\u003cbr\u003e\u003cbr\u003e\"A mind-bending and indispensable book for entrepreneurs, leaders, and anyone who faces risk on a regular basis.\" –Olivia Fox Cabane, author of \u003ci\u003eThe Net and the Butterfly\u003cbr\u003e\u003cbr\u003e\u003c\/i\u003e“A highly-readable balance between memorable, real-world analogies and hardcore behavioral science studies... The book is packed with insights.” –John Greathouse,\u003ci\u003e Forbes\u003cbr\u003e\u003c\/i\u003eAnnie Duke is a World Series of Poker bracelet winner, the winner of the 2004 Tournament of Champions and the only woman to win the NBC National Poker Heads Up Championship. Now, as a professional speaker and decision strategist, she merges her poker expertise with her cognitive psychology graduate work at UPenn. She is a founder of How I Decide, a non-profit that creates curricula and tools to improve decision making and critical thinking skills for under-served middle schoolers.Chapter 1\u003cbr\u003e\u003cbr\u003e Life Is Poker, Not Chess\u003cbr\u003e\u003cbr\u003e Pete Carroll and the Monday Morning Quarterbacks\u003cbr\u003e\u003cbr\u003e One of the most controversial decisions in Super Bowl history took      place in the closing seconds of Super Bowl XLIX in 2015. The      Seattle Seahawks, with twenty-six seconds remaining and trailing      by four points, had the ball on second down at the New England      Patriots' one-yard line. Everybody expected Seahawks coach Pete      Carroll to call for a handoff to running back Marshawn Lynch. Why      wouldn't you expect that call? It was a short-yardage situation      and Lynch was one of the best running backs in the NFL.\u003cbr\u003e\u003cbr\u003e Instead, Carroll called for quarterback Russell Wilson to pass.      New England intercepted the ball, winning the Super Bowl moments      later. The headlines the next day were brutal:\u003cbr\u003e\u003cbr\u003e USA Today: \"What on Earth Was Seattle Thinking with Worst Play      Call in NFL History?\"\u003cbr\u003e\u003cbr\u003e Washington Post: \"'Worst Play-Call in Super Bowl History' Will      Forever Alter Perception of Seahawks, Patriots\"\u003cbr\u003e\u003cbr\u003e FoxSports.com: \"Dumbest Call in Super Bowl History Could Be      Beginning of the End for Seattle Seahawks\"\u003cbr\u003e\u003cbr\u003e Seattle Times: \"Seahawks Lost Because of the Worst Call in Super      Bowl History\"\u003cbr\u003e\u003cbr\u003e The New Yorker: \"A Coach's Terrible Super Bowl Mistake\"\u003cbr\u003e\u003cbr\u003e Although the matter was considered by nearly every pundit as      beyond debate, a few outlying voices argued that the play choice      was sound, if not brilliant. Benjamin Morris's analysis on      FiveThirtyEight.com and Brian Burke's on Slate.com convincingly      argued that the decision to throw the ball was totally defensible,      invoking clock-management and end-of-game considerations. They      also pointed out that an interception was an extremely unlikely      outcome. (Out of sixty-six passes attempted from an opponent's      one-yard line during the season, zero had been intercepted. In the      previous fifteen seasons, the interception rate in that situation      was about 2%.)\u003cbr\u003e\u003cbr\u003e Those dissenting voices didn't make a dent in the avalanche of      criticism directed at Pete Carroll. Whether or not you buy into      the contrarian analysis, most people didn't want to give Carroll      the credit for having thought it through, or having any reason at      all for his call. That raises the question: Why did so many people      so strongly believe that Pete Carroll got it so wrong?\u003cbr\u003e\u003cbr\u003e We can sum it up in four words: the play didn't work.\u003cbr\u003e\u003cbr\u003e Take a moment to imagine that Wilson completed the pass for a      game-winning touchdown. Wouldn't the headlines change to      \"Brilliant Call\" or \"Seahawks Win Super Bowl on Surprise Play\" or      \"Carroll Outsmarts Belichick\"? Or imagine the pass had been      incomplete and the Seahawks scored (or didn't) on a third- or      fourth-down running play. The headlines would be about those other      plays. What Pete Carroll called on second down would have been      ignored.\u003cbr\u003e\u003cbr\u003e Carroll got unlucky. He had control over the quality of the      play-call decision, but not over how it turned out. It was exactly      because he didn't get a favorable result that he took the heat. He      called a play that had a high percentage of ending in a      game-winning touchdown or an incomplete pass (which would have      allowed two more plays for the Seahawks to hand off the ball to      Marshawn Lynch). He made a good-quality decision that got a bad      result.\u003cbr\u003e\u003cbr\u003e Pete Carroll was a victim of our tendency to equate the quality of      a decision with the quality of its outcome. Poker players have a      word for this: \"resulting.\" When I started playing poker, more      experienced players warned me about the dangers of resulting,      cautioning me to resist the temptation to change my strategy just      because a few hands didn't turn out well in the short run.\u003cbr\u003e\u003cbr\u003e Pete Carroll understood that his universe of critics was guilty of      resulting. Four days after the Super Bowl, he appeared on the      Today show and acknowledged, \"It was the worst result of a call      ever,\" adding, \"The call would have been a great one if we catch      it. It would have been just fine, and nobody would have thought      twice about it.\"\u003cbr\u003e\u003cbr\u003e Why are we so bad at separating luck and skill? Why are we so      uncomfortable knowing that results can be beyond our control? Why      do we create such a strong connection between results and the      quality of the decisions preceding them? How can we avoid falling      into the trap of the Monday Morning Quarterback, whether it is in      analyzing someone else's decision or in making and reviewing the      decisions in our own lives?\u003cbr\u003e\u003cbr\u003e The hazards of resulting\u003cbr\u003e\u003cbr\u003e Take a moment to imagine your best decision in the last year. Now      take a moment to imagine your worst decision.\u003cbr\u003e\u003cbr\u003e I'm willing to bet that your best decision preceded a good result      and the worst decision preceded a bad result.\u003cbr\u003e\u003cbr\u003e That is a safe bet for me because resulting isn't just something      we do from afar. Monday Morning Quarterbacks are an easy target,      as are writers and bloggers providing instant analysis to a mass      audience. But, as I found out from my own experiences in poker,      resulting is a routine thinking pattern that bedevils all of us.      Drawing an overly tight relationship between results and decision      quality affects our decisions every day, potentially with      far-reaching, catastrophic consequences.\u003cbr\u003e\u003cbr\u003e When I consult with executives, I sometimes start with this      exercise. I ask group members to come to our first meeting with a      brief description of their best and worst decisions of the      previous year. I have yet to come across someone who doesn't      identify their best and worst results rather than their best and      worst decisions.\u003cbr\u003e\u003cbr\u003e In a consulting meeting with a group of CEOs and business owners,      one member of the group identified firing the president of his      company as his worst decision. He explained, \"Since we fired him,      the search for a replacement has been awful. We've had two      different people on the job. Sales are falling. The company's not      doing well. We haven't had anybody come in who actually turns out      to be as good as he was.\"\u003cbr\u003e\u003cbr\u003e That sounds like a disastrous result, but I was curious to probe      into why the CEO thought the decision to fire his president was so      bad (other than that it didn't work out).\u003cbr\u003e\u003cbr\u003e He explained the decision process and the basis of the conclusion      to fire the president. \"We looked at our direct competitors and      comparable companies, and concluded we weren't performing up to      their level. We thought we could perform and grow at that level      and that it was probably a leadership issue.\"\u003cbr\u003e\u003cbr\u003e I asked whether the process included working with the president to      understand his skill gaps and what he could be doing better. The      company had, indeed, worked with him to identify his skill gaps.      The CEO hired an executive coach to work with him on improving his      leadership skills, the chief weakness identified.\u003cbr\u003e\u003cbr\u003e In addition, after executive coaching failed to produce improved      performance, the company considered splitting the president's      responsibilities, having him focus on his strengths and moving      other responsibilities to another executive. They rejected that      idea, concluding that the president's morale would suffer,      employees would likely perceive it as a vote of no confidence, and      it would put extra financial pressure on the company to split a      position they believed one person could fill.\u003cbr\u003e\u003cbr\u003e Finally, the CEO provided some background about the company's      experience making high-level outside hires and its understanding      of the available talent. It sounded like the CEO had a reasonable      basis for believing they would find someone better.\u003cbr\u003e\u003cbr\u003e I asked the assembled group, \"Who thinks this was a bad decision?\"      Not surprisingly, everybody agreed the company had gone through a      thoughtful process and made a decision that was reasonable given      what they knew at the time.\u003cbr\u003e\u003cbr\u003e It sounded like a bad result, not a bad decision. The imperfect      relationship between results and decision quality devastated the      CEO and adversely affected subsequent decisions regarding the      company. The CEO had identified the decision as a mistake solely      because it didn't work out. He obviously felt a lot of anguish and      regret because of the decision. He stated very clearly that he      thought he should have known that the decision to fire the      president would turn out badly. His decision-making behavior going      forward reflected the belief that he made a mistake. He was not      only resulting but also succumbing to its companion, hindsight      bias. Hindsight bias is the tendency, after an outcome is known,      to see the outcome as having been inevitable. When we say, \"I      should have known that would happen,\" or, \"I should have seen it      coming,\" we are succumbing to hindsight bias.\u003cbr\u003e\u003cbr\u003e Those beliefs develop from an overly tight connection between      outcomes and decisions. That is typical of how we evaluate our      past decisions. Like the army of critics of Pete Carroll's      decision to pass on the last play of the Super Bowl, the CEO had      been guilty of resulting, ignoring his (and his company's) careful      analysis and focusing only on the poor outcome. The decision      didn't work out, and he treated that result as if it were an      inevitable consequence rather than a probabilistic one.\u003cbr\u003e\u003cbr\u003e In the exercise I do of identifying your best and worst decisions,      I never seem to come across anyone who identifies a bad decision      where they got lucky with the result, or a well-reasoned decision      that didn't pan out. 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. No      sober person thinks getting home safely after driving drunk      reflects a good decision or good driving ability. Changing future      decisions based on that lucky result is dangerous and unheard of      (unless you are reasoning this out while drunk and obviously      deluding yourself).\u003cbr\u003e\u003cbr\u003e Yet this is exactly what happened to that CEO. He changed his      behavior based on the quality of the result rather than the      quality of the decision-making process. He decided he drove better      when he was drunk.\u003cbr\u003e\u003cbr\u003e Quick or dead: our brains weren't built for rationality\u003cbr\u003e\u003cbr\u003e The irrationality displayed by Pete Carroll's critics and the CEO      should come as no surprise to anyone familiar with behavioral      economics. Thanks to the work of many brilliant psychologists,      economists, cognitive researchers, and neuroscientists, there are      a number of excellent books that explain why humans are plagued by      certain kinds of irrationality in decision-making. (If you are      unaware of these books, see the Selected Bibliography and      Recommendations for Further Reading.) But here's a summary.\u003cbr\u003e\u003cbr\u003e To start, our brains evolved to create certainty and order. We are      uncomfortable with the idea that luck plays a significant role in      our lives. We recognize the existence of luck, but we resist the      idea that, despite our best efforts, things might not work out the      way we want. It feels better for us to imagine the world as an      orderly place, where randomness does not wreak havoc and things      are perfectly predictable. We evolved to see the world that way.      Creating order out of chaos has been necessary for our survival.\u003cbr\u003e\u003cbr\u003e When our ancestors heard rustling on the savanna and a lion jumped      out, making a connection between \"rustling\" and \"lions\" could save      their lives on later occasions. Finding predictable connections      is, literally, how our species survived. Science writer,      historian, and skeptic Michael Shermer, in The Believing Brain,      explains why we have historically (and prehistorically) looked for      connections even if they were doubtful or false. Incorrectly      interpreting rustling from the wind as an oncoming lion is called      a type I error, a false positive. The consequences of such an      error were much less grave than those of a type II error, a false      negative. A false negative could have been fatal: hearing rustling      and always assuming it's the wind would have gotten our ancestors      eaten, and we wouldn't be here.\u003cbr\u003e\u003cbr\u003e Seeking certainty helped keep us alive all this time, but it can      wreak havoc on our decisions in an uncertain world. When we work      backward from results to figure out why those things happened, we      are susceptible to a variety of cognitive traps, like assuming      causation when there is only a correlation, or cherry-picking data      to confirm the narrative we prefer. We will pound a lot of square      pegs into round holes to maintain the illusion of a tight      relationship between our outcomes and our decisions.\u003cbr\u003e\u003cbr\u003e Different brain functions compete to control our decisions. Nobel      laureate and psychology professor Daniel Kahneman, in his 2011      best-selling Thinking, Fast and Slow, popularized the labels of      \"System 1\" and \"System 2.\" He characterized System 1 as \"fast      thinking.\" System 1 is what causes you to hit the brakes the      instant someone jumps into the street in front of your car. It      encompasses reflex, instinct, intuition, impulse, and automatic      processing. System 2, \"slow thinking,\" is how we choose,      concentrate, and expend mental energy. Kahneman explains how      System 1 and System 2 are capable of dividing and conquering our      decision-making but work mischief when they conflict.\u003cbr\u003e\u003cbr\u003e I particularly like the descriptive labels \"reflexive mind\" and      \"deliberative mind\" favored by psychologist Gary Marcus. In his      2008 book, Kluge: The Haphazard Evolution of the Human Mind, he      wrote, \"Our thinking can be divided into two streams, one that is      fast, automatic, and largely unconscious, and another that is      slow, deliberate, and judicious.\" The first system, \"the reflexive      system, seems to do its thing rapidly and automatically, with or      without our conscious awareness.\" The second system, \"the      deliberative system . . . deliberates, it considers, it chews over      the facts.\"\u003cbr\u003e\u003cbr\u003e The differences between the systems are more than just labels.      Automatic processing originates in the evolutionarily older parts      of the brain, including the cerebellum, basal ganglia, and      amygdala. Our deliberative mind operates out of the prefrontal      cortex.\u003cbr\u003e\u003cbr\u003e Colin Camerer, a professor of behavioral economics at Caltech and      leading speaker and researcher on the intersection of game theory      and neuroscience, explained to me the practical folly of imagining      that we could just get our deliberative minds to do more of the      decision-making work. \"We have this thin layer of prefrontal      cortex made just for us, sitting on top of this big animal brain.      Getting this thin little layer to handle more is unrealistic.\" The      prefrontal cortex doesn't control most of the decisions we make      every day. We can't fundamentally get more out of that unique,      thin layer of prefrontal cortex. \"It's already overtaxed,\" he told      me.\u003cbr\u003e\u003cbr\u003e These are the brains we have and they aren't changing anytime      soon. Making more rational decisions isn't just a matter of      willpower or consciously handling more decisions in deliberative      mind. Our deliberative capacity is already maxed out. We don't      have the option, once we recognize the problem, of merely shifting      the work to a different part of the brain, as if you hurt your      back lifting boxes and shifted to relying on your leg muscles.\u003cbr\u003e\u003cbr\u003e Both deliberative and reflexive mind are necessary for our      survival and advancement. The big decisions about what we want to      accomplish recruit the deliberative system. Most of the decisions      we execute on the way to achieving those goals, however, occur in      reflexive mind. The shortcuts built into the automatic processing      system kept us from standing around on the savanna, debating the      origin of a potentially threatening sound while its source      devoured us. Those shortcuts keep us alive, routinely executing      the thousands of decisions that make it possible for us to live      our daily lives.","brand":"Portfolio","offers":[{"title":"Default Title","offer_id":46304888357093,"sku":"NP9780735216358","price":31.0,"currency_code":"USD","in_stock":false}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/1842\/7735\/files\/9780735216358.jpg?v=1767742452","url":"https:\/\/k12savings.com\/es\/products\/thinking-in-bets-isbn-9780735216358","provider":"K12savings","version":"1.0","type":"link"}