“Wanna Bet?” Apply Poker Strategies to Smart Decision Making or Annie Duke’s Guide to Everyday Game Play


David Seelow, Ph.D.©

We have all heard those famous grand metaphors, “Life is a Dream,” “Life is a Stage,” “Life is a Simulation,” and “Life is like Poker.” We can, perhaps, agree such metaphors have a touch of metaphysical truth, but outside philosophizing they have little merit. Well, maybe. Annie Duke takes a different approach to the “life is like poker,” saying and demonstrates how poker  can be applied to life in very concrete positive ways. Her new book, “Thinking in Bets: Making Smarter Decisions When You Don’t Have all the Facts,” (Portfolio/Penguin, 2018) offers a treasure trove of applied game strategies to decision making.

Annie Duke should know about poker; she is a World Series of Poker Champion (2014), but more than that, she combines her poker acumen with a solid foundation in cognitive science. Ms. Duke has a degree from Columbia, and completed all her doctoral work in psychology at Penn. Her strategies are informed by the latest research in cognitive and neuroscience. Duke integrates this research with her poker expertise to help readers think more clearly and understand the thinking behind good decision making.

Poker is a pressure cooker for decision making. As Ms. Duke explains, a single hand of poker may only take 2 minutes, but those 2 minutes might require 20 decisions, and quick decisions at that. Moreover, poker decisions have immediate feedback. You either win or lose money based upon the result of your decision making. How does this apply to life? Well, another game, American football, also requires split second decisions with implications for winning or losing. Duke begins her excellent book discussing Pete Carroll’s much maligned decision to call a pass play in Super Bowl LXIX that resulted in an interception and Seattle’s last-minute loss to the New England Patriots. Terrible result, but Duke claims, a solid decision. In fact, the chances of Russell Wilson throwing an interception in that situation was only about 2%. Her very big point is that good decisions can result in bad outcomes. That’s life. No guarantees in football (Joe Namath aside), poker or life.  Negative reactions to Carroll’s decision by the multitude on Monday morning quarterbacks exemplifies what Duke calls resulting. * Resulting determines the quality of a decision based upon its result, and this thinking necessarily succumbs to hindsight bias. Humans are still unable to see the future, so Duke suggests we stop thinking we can make decisions based on the unknown. Hence the subtitle of her work’s emphasis on “when we don’t have all the facts.”

We rarely have all the facts when making decisions and Duke address hidden information with three invaluable and interrelated points.  First, thoroughly research a decision. Duke became a great poker player, partly through research. She read and studied expert books (e.g. Doyle Brunson’s Super System: A Course in Poker Power, Cardoza Publishing, 2002), talked with experts (like her brother Howard, a master poker player) and observed the best (such as her friend Erik Seidel). Knowing as much as possible surrounding a decision optimizes the decision-making progress.  Second, think in terms of probability. A poker player applies math to each situation. You do not know which cards your opponents hold, but you can know the probability of various combinations based upon your cards and the cards on the table. Third, re-frame your thinking from absolutes of black and white to degrees of certainty. The false dilemma of black and white so often used by politicians in their faulty argumentation need to be rendered as shades of grey. For example, instead of thinking that a decision must be either right of wrong, think about a decision having say a 72% chance of a successful outcome (p.70). Such probabilistic thinking, which is evidence based, helps calibrate one’s decisions and improve the likelihood of a positive outcome.

On this last point, Duke stresses an element present in game-based thinking. In game-based thinking failure is always reframed as an opportunity, a productive failure or failing forward, not a setback, and never a final determination about one’s thinking or performance. Duke makes this same point when vociferously argue against the word wrong (p. 31), and she admonishes us not to say thinks like “I knew it” because we don’t know the outcome in advance. For just this reason, I dislike multiple choice tests which demand a correct answer and incorrect answers as if problems and questions can be rendered in such absolute terms.  Rather, as Duke suggests, don’t be afraid to admit, “I’m unsure,” because that statement provides a more accurate representation of the world and forecloses on black and white thinking or essentializing (p. 29).

In thinking about decisions as degrees of accuracy we are also admitting the potential role of luck or chance, involved in many decisions.  In chess, there is no luck, but in poker, like most games, and most of life, chance has a place. You can be a master poker player and still lose to an average player who pulls great cards, against the odds. We cannot rule out luck, but we can prepare for its possibility.  I like to think of luck as beating overwhelming odds against such as winning a multi million-dollar Lottery jackpot or a pitcher with a .110 batting average hitting a game winning home run against a top reliever. Maybe even me, winning a hand of poker against Annie Duke. That’s luck, and you can never rule out that unpredictable outcome, but in the long run or big picture, probabilities win out. In ten hands against Annie Duke I will lose 9. You won’t win the huge jackpot twice, and that pitcher will make an out the next nine at bats (that’s why his average is .110). Again, calibrate decisions based on probabilities of a good outcome.

At this point, let me focus on how Annie Duke uses the betting process, at the core of poker as the key to good decision making. For Duke, thinking in bets helps examine whether an outcome results from skill or luck (p. 112). Let’s begin with Ms. Duke’s definition of a bet as a decision about an uncertain future (p. 3). What the bet does to the decision is activate our prefrontal cortex, if you will, and trigger us to vet a decision based upon evidence (p. 65) not just belief (often a form of wishful thinking, not logical thinking). “By treating decisions as bets, poker players explicitly recognize that they are deciding on alternate futures, even with benefits and risks” (p. 43).

Bets force us to vet our decisions more closely precisely because bets demand accountability. If you lose the bet, you lose money. Most of us do not want to lose money so when we place a bet we want the chances of success to be high, certainly over 50%. If we bet on low probability, say 5%, we should be able afford the risk, or at least fully realize the odds of success, defined as winning the bet, are low. Duke nicely describes this betting as vetting, “The more we realize that we are betting on our beliefs (with happiness, attention, health, money, time or some other limited resource), the more likely we are to temper our statements, getting closer to the truth as we acknowledge the risk inherent in what we believe” (p. 66). Sounds a little like life as Jeopardy. Jeopardy means risk, but, of course, in the game, you don’t bet your own money. That would really be jeopardy!!! Last week while conducting a class wide challenge about superheroes I stopped midway and asked if anyone thought they all identifications had been correct thus far (thought is belief). One student raised his hand and confidently asserted he believed he had all the correct identifications (he is an excellent student). “Would you bet on that?” I asked (just playing of course to make a point). He now hesitated, the confidence waning a bit. “Yes, I think so.” “Would you bet $100 on your answers?” “I would bet $2” was his response. The certainty disappeared in the face of a bet because the bet forced accountability and close examination of how certain he was of the answers. As I said, he is a smart student because he would have lost that bet. Another student, with a lower average succeeded in winning the challenge.

The bet forces accountability and modifies belief. In other words, a bet mediates feedback about a decision.

Belief               Bet              Outcome          Bet 2 (p. 80).    Modified Belief

 

Duke cites plenty of excellent research in neuroscience that shows how frequently most of us short cut deliberation in favor of quick decisions with little evidence to substantiate their merit. Our tendency is to seek conformation of already established beliefs reinforcing a limited perspective. The clear polarization of our current Congress illustrates this closed, inflexible approach to decision making. For Duke, the introduction of the betting mechanic disrupts this closed circuit of self-deception.

A belief can suffer from many shortcomings. Perhaps, we think we must get some good cards this time as if we can control chance. Maybe we think an advertisement about a product is based on vetted, peer reviewed research when it’s really just proclamation. A bet makes up accountable for the belief and its foundation. If the belief lacks evidence the bet will result in a poor outcome and we lose money, but this accountability gives us valuable feedback that encourages or prompts us to reexamine our belief and what its based on. This examination, in turn, will make our next bet more deliberate and that improved outcome will potentially lead us to modify the original belief.

One of Duke’s favorite sources is Samuel Arbesman’s The Half Life of Facts: Why Everything We Know Has an Expiration Date (Penguin Reprint Edition, 2013). Arbesman historicizes facts to show how often today’s facts become tomorrow’s fictions. We cannot predict where science and technology will lead us, but research indicates many cherished beliefs will go by the wayside (you know the earth is flat truth of yore or addiction is a moral fault, a fiction still many try to hold onto). Duke’s point, in following Arbesman, stresses the value of considering alternate explanations, entertaining an open approach to future possibilities, acknowledging uncertainty, and calibrating our decisions.

I want to stress two final points from this  rich and valuable book. In her consulting work Duke writes about what she calls prediction markets. In this business model a group tests decision through bets. The bet tests a group’s confidence in an executive decision. “People are more willing to offer their opinion when the goal is to win a bet rather than get along with the people in the room” (p. 150). In other words, the bet elicits honesty and honestly challenges groupthink and narrow thinking. On a related point, Dukes stresses the value of dissent and skepticism within a group. A homogeneous group stagnates.  Diversity promotes growth. A bet introduces the possibility of dissent, but dissent not as disruption or a leak in the side of smooth sailing ship, but rather, an interruption of a ship that might be off course if the directions are not as precise as what we believe. Dissent stops a quick unexamined belief or assumed certainty, allows us time to think through the options, clarify our choice, and genuinely test how certain we are about a decision before putting our cards on the table. The bet does not mean we will be right, but the bet does show we are confident in our decision, and our chances of success are more likely than before the bet is made. If you read “Thinking in Bets”, absorb its research and apply its strategies your decisions will improve. Wanna bet?

*Resulting bears some resemblance to the classic logical fallacy of post hoc ergo propter hoc where people assume something that follows something else must be casual when that often is not the case. B is not always because of A.

 

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