Do you like making decisions? Are you good at making them? We all make bad decisions, how can we make better ones? I read books on all topics, but books about how to improve your thinking and decisions making are top on my list. With that said, one book I recommend people read is Thinking in Bets by Annie Duke; a professional poker player, and author. The book argues that decision-making is a process of making bets, and that by understanding this process, we can make better decisions.
The main idea of the book is that decision-making is a process of making bets, where we weigh the potential outcomes of different choices and make a decision based on the best available information. To make better decisions, we need to understand the difference between a good decision and a good outcome. A good decision is one that takes into account all the available information and makes the best choice based on that information. A good outcome is when the decision made results in a favorable outcome.
Mrs. Duke writes that it is important to have a robust process for decision-making, to ensure that all relevant information is considered, and that biases are minimized. She also advises to use tools such as pre-mortem, scenario planning, and first-principles thinking to make better decisions. She also highlights the importance of learning from failures, understanding that failures are not personal, and that they are a natural part of the decision-making process.
What are the decision making tools recommened by Annie Duke?
Annie Duke suggests several tools that can be used to make better decisions. Here are 8 of them:
- Pre-mortem: It involves imagining that a decision has failed and then working backwards to identify the reasons for the failure. This can help to identify potential weaknesses and biases in a decision-making process. Projecting yourself forward to see what are the consequences of failing is a powerful motivation and clarity of thinking strategy.
- Scenario planning: It’s about considering multiple potential outcomes and preparing for them in advance. This can help to minimize the impact of unexpected events and to be better prepared to take advantage of opportunities that arise.
- First-principles thinking: It’s about breaking down a problem or decision into its fundamental building blocks, and then reasoning up from there. This can help to identify underlying assumptions and to see a problem or decision in a new light.
- Base rate information: It involves looking at historical data and information to make a decision. This can help to minimize the impact of biases and emotions on a decision.
- Inverse thinking: It’s about reversing the problem and thinking about what would happen if the opposite was true. This can help to identify new solutions and to think about a problem in a new way.
- Probabilistic thinking: It involves thinking about decision outcomes in terms of probabilities and potential payoffs, rather than certainties. This can help to make better decisions by considering all the potential outcomes and the likelihood of each one.
- Bayesian thinking: It’s about updating beliefs based on new information and evidence. This can help to improve decision-making by taking into account new information as it becomes available.
- Counterfactual thinking: It involves thinking about what would have happened if a different decision had been made. This can help to learn from past decisions and to make better decisions in the future.
These tools can be used in combination or separately, to help improve decision making process and to help make better decisions.
Here’s a video review of the book by Productivity Game:
Bottom line: “Thinking in Bets” argues that decision-making is a process of making bets, and that by understanding this process, we can make better decisions. It emphasizes the importance of a robust decision-making process, learning from failure, and understanding that a good decision does not always lead to a good outcome.