Thinking in Bets

My notes for future me

A bet really is: a decision about an uncertain future.

Thinking in bets starts with recognizing that there are exactly two things that determine how our lives turn out: The quality of our decisions and luck.

Mistakes, emotions, losing: those things are all inevitable because we are human.

Chess, for all its strategic complexity, isn't a great model for decision-making in life, where most of our decisions involve hidden information and a much greater influence of luck.

We are discouraged from saying "I don't know" or "I'm not sure." We regard those expressions as vague, unhelpful, and even evasive. But getting comfortable with "I'm not sure" is a vital step to being a better decision maker. We have to make peace with not knowing.

What good poker players and good decision makers have in common is their comfort with the world being an uncertain and unpredictable place. They understand that they can almost never know exactly how something will turn out. They embrace that uncertainty and instead of focusing on being sure, they try to figure out how unsure they are, making their best guess at the chances that different outcomes will occur. The accuracy of those guesses will depend on how much information they have and how experienced they are at making such guesses. This is part of the basis of all bets.

So winning $100 at blackjack feels as good to us as losing $50 feels bad to us.

People are credulous creatures who find it very easy to believe and very difficult to doubt.

Our default setting is to believe what we hear is true.

The system we already had was:

1. Experience it

2. Believe it to be true

3. Maybe and rarely question it later.

Fake news works because people who already hold beliefs consistent with the story generally won't question the evidence. This information is even more powerful because the confirmable facts in the story make it feel like the information has been vetted, adding to the power of the narrative being pushed.

Surprisingly being smart can actually make bias worse. Let me give you a different intuitive frame. The smarter you are, the better you are at constructing a narrative that supports your beliefs, rationalizing and framing the data to fit your argument or point of view. After all people in the spin room in a political setting are generally pretty smart for a reason.

In 2012 psychologists Richard West, Russell Meserve, and Keith Stanovich tested the blind spot bias, an irrationality where people are better at recognizing biased reasoning in others but are blind to biases in themselves. Overall their work supports a variety of cognitive biases: yes we all have a blind spot about recognizing our biases. The surprise is that blind spot bias is greater the smarter you are. The researchers tested subjects for seven cognitive biases and found that cognitive ability did not attenuate the blind spot. Furthermore people who were aware of their own biases were not better able to overcome them. In fact in six of seven biases tested, more cognitively sophisticated participants showed larger bias blind spots.

Ayça der ki ( peki insan beyni neden böyle evrimleşti? ) çünkü en başından beri kurulan komün düzeninde liderler diğerlerine sorgulatmayarak, dediklerini kabul ettirerek yönettiler. Çünkü bu daha kolaydı.

So far this chapter has mainly been bad news. We bet on our beliefs. We don't vet those beliefs well before we form them. We stubbornly refuse to update our beliefs. Now I piled on by telling you that being smart doesn't help and can make it worse. The good news starts here.

Once we start doing that we are more likely to recognize that there is always a degree of uncertainty, that we are generally less sure than we thought we were, that nothing is black and white, 0% or 100%, and that's a pretty good philosophy for living.

Statements of science are not what is true and what is not true, but statements of what is known to different degrees of uncertainty.

In multiple-vehicle accidents 91% of drivers blamed someone else. Most remarkably MacCoun found that in single-vehicle accidents 37% of drivers still found a way to pin the blame on someone else.

In poker the bulk of what goes on is watching. An experienced player will choose to play only about 20% of the hands they are dealt, folding the other 80% of the hands before even getting past the first round of betting. That means about 80% of the time is spent just watching other people play.

We think we know the ingredients for happiness. Sonia Lubomirski is a psychology professor at the University of California, Riverside, and a popular author on the subject of happiness. She summarizes several reviews of the literature on the elements we commonly consider:

- a comfortable income

- robust health

- a successful marriage

- lack of tragedy or trauma Lybomirsky noted, however, that the general conclusion from almost a century of research on the determinants of well-being is that objective circumstances, demographic variables, and life events are correlated with happiness less strongly than intuition and everyday experience tell us they ought to be. What accounts for most of the variance in happiness is how we are doing comparatively. The breadth and depth of all that research on happiness and its implications is important but it's beyond what we need to understand our issue with sorting others' outcomes.

!!! In 2004 my brother provided televised final table commentary for a tournament in which Phil Ivey smoked a star-studded final table. After his win, the two of them went to a restaurant for dinner, during which I deconstructed every potential playing error he thought he might have made on the way to victory, asking my brother's opinion about each strategic decision. A more run-of-the-mill player might have spent the time talking about how great they played, relishing the victory. Not Ivey. For him the opportunity to learn from his mistakes was much more important than treating the dinner as a satisfying celebration.

He earned $500,000 and won a lengthy poker tournament over world-class competition but all he wanted to do was discuss the fellow from where he might have made better decisions.

Many people say I'm the best women's soccer player in the world. I don't think so and because of that, someday I just might be.

Certainly in exchange for losing the fear of taking blame for bad outcomes, you also lose the unadulterated high of claiming good outcomes were 100% skill. That's a trade you should take. Remember, losing feels about twice as bad as winning feels good. Being wrong feels about twice as bad as being right feels good. We are in a better place when we don't have to live at the edges.

I still catch myself falling into the self-serving bias and motivated reasoning traps.

!!! The benefits of recognizing just a few extra learning opportunities compound over time. The cumulative effect of being a little better at decision-making, like compounding interest, can have huge effects in the long run on everything that we do.

And I was also lucky that if I wanted to engage that group about Poker, I had to ask about my strategic decisions. I had to resist my urge to mourn about my bad luck and focus instead on where I felt I made mistakes and where I was confused about what to do next.

Forming or joining a group where the focus is on thinking in bets means modifying the usual social contract. It means agreeing to be open-minded to those who disagree with us, giving credit where it's due, and taking responsibility where it's appropriate, even and especially when it makes us uncomfortable.

Different friends feel different needs and not all of them need to be cut from the same cloth.

Being in a group can improve our decision quality by exploring alternatives and recognizing where our thinking might be biased but a group can also exacerbate our tendency to confirm what we already believe. Philip Tetlock and Jennifer Lerner, leaders in the science of group interaction, described the two kinds of group reasoning styles in an influential 2002 paper.

For engaging in the difficult work involved in sobriety, local AA groups give tokens or chips celebrating the length of individual members' sobriety. The tokens, which members often carry or customize as jewelry, are a tangible reminder that others acknowledge you are accomplishing something difficult. There are chips for marking 1 to 65 years of sobriety. There are also chips given for every month of sobriety in the first year. There is even a chip given for being sober for 24 hours.

The State Department, since the Vietnam War, has had a formal dissent channel.

When there was political diversity on the panels, the researchers found several areas where the diversity improved the panels' work. Even though in most cases two politically similar judges could dictate the panel's outcome, there were significant differences between heterogeneous and homogeneous panels. A single panelist from the other party had a large disciplining effect.

The BBS paper explained and documented the political imbalance in social psychology, how it reduces the quality of science, and what can be done to improve the situation.

First the heterodox academy effort shows that there is a natural drift toward homogeneity and confirmatory thought.

Second, groups with diverse viewpoints are the best protection against confirmatory thought.

In a Twitter feed for whom you follow, it's a pretty safe bet that the bulk of them are ideologically aligned with you. If that's the case start following some people from the other side of the aisle.

The free press and free speech guarantees of the Constitution recognize the importance of self-expression.

He was identifying what he thought was a bad decision, justified by his initial description of the situation, after we got every detail out of all the dimensions of the decision. We reached a different conclusion. The decision to fire the president had been quite reasonable strategically. It just happened to turn out badly.

The king of Armenia got advance notice that Lucullus' troops were approaching. He killed the messenger for delivering that message and henceforth messengers stopped reporting such intelligence. Obviously if you don't like the message, you shouldn't take it out on the messenger.

When we have a negative opinion about the person delivering the message, we close our minds to what they are saying and miss a lot of learning opportunities because of it. Likewise when we have a positive opinion of the messenger, we tend to accept the message without much vetting. Both are bad.

How would we feel about this if we heard it from a much different source?

It was recently discovered that a trade group representing the sugar industry had paid three Harvard scientists to write the paper.

!!!Every person has bias. To have a good-sized group, that's very, very important.

A group can de-bias members.

If two people disagree, a referee can get them to each argue the other's position with the goal of being the best debater. This acts to shift the interest to the opposing opinion rather than confirmation of the original position.

If someone expresses a belief or prediction that doesn't sound well-calibrated and we have relevant information, try to say, "I agree with you that [insert specific concepts and ideas we agree with], AND...'' after ''and'' add the additional information. In the same exchange, if we said, "I agree with you that [insert specific concepts and ideas you agree with], BUT ..., '" that challenges people and puts them on the defensive. ''And'' is an offer to contribute ''But'' is a denial

They say they are looking for advice and that is potentially an agreement to opt into some truth-seeking. Even then there is a threat because people may say they want advice when what they really want is to be affirmed.

!!!We are generally pretty good at identifying the positive goals we are striving for. Our problem is in the execution of the decisions along the way to reaching these goals. People dislike engaging with their poor execution.

That leads to the final decision strategy of this book: ways to use time travel techniques for better decision-making. By recruiting past and future versions of yourself, you can become your own buddy!!

!!!

Just as we can recruit other people to be our decision buddies, we can recruit other versions of ourselves to act as our own decision buddies. We can harness the power of mental time traveling, operationalizing it, encouraging it, and figuring out ways to cause that collision of past, present, and future as much as possible. Present us needs that help and past us and future us can be the best decision bodies for the job.

We are more likely to make choices consistent with our long-term goals when we can get out of the moment and engage our past and future selves.

But if regret occurred before a decision instead of after, the experience of regret might get us to change a choice likely to result in a bad outcome. !!!!!

Every 10 - 10 - 10 process starts with a question. What are the consequences of each of my options in 10 minutes, in 10 months, in 10 years?

We can pre-commit to walk away from the situation when we feel the signs of tilt.

Nice way to proceed for better. Add obstacles ( Odysseus example: Odysseus told his crew to tie his hands to the mast and fill their ears with beeswax as they approached the islands. )

Van Frederick Lowe Olmsted designs Central Park, He recognized that a lot of the charm of the park and a lot of enjoyment that people would get from it would take decades as the landscape changed and matured. People walking through Central Park when it opened to the public in 1858 would have seen a lot of barren land. Even in 1873, when construction was substantially completed, there was a lot of undergrowth. The trees, shrubs, and plants were recent transplants. None of those visitors would recognize Central Park today but Olmsted would because he was starting from what it would develop into.

Each person engaged in the planning imagines holding up a newspaper whose headline reads, "Company X has doubled its market share over the past three years." The team leader now asks them to identify the reasons they got there, what events occurred, what decisions were made, and what went their way to get the enterprise to capture the market share.

Despite the popular wisdom that we achieve success through positive visualization, it turns out that incorporating negative visualization makes us more likely to achieve our goals.

We think and recognize that we need to have positive goals but we are more likely to execute on those goals if we think about the negative futures.

Book recommendation: Theory of Games and Economic Behavior