(2018-08-12) Thinking In Bets Making Smarter Decisions When You Dont Have All The Facts Book Notes

Si Quan Ong: Thinking in Bets: Making Smarter Decisions When You Don’t Have All The Facts — Book Notes. 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. Learning to recognize the difference between the two is what thinking in bets is all about.

Chapter 1: Life is Poker, Not Chess

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.

John von Neumann said. “Chess is not a game. Chess is a well-defined form of computation. You may not be able to work out the answers, but in theory there must be a solution, a right procedure in any position. Now, real games,” he said, “are not like that at all. Real life is not like that. Real life consists of bluffing, of little tactics of deception, of asking yourself what is the other man going to think I mean to do. And that is what games are about in my theory.” (game theory)

Our lives are too short to collect enough data from our own experience to make it easy to dig down into decision quality from the small set of results we experience.

Chapter 2: Wanna Bet?

All those rejected alternatives are paths to possible futures where things could be better or worse than the path we chose. There is potential opportunity cost in any choice we forgo.

In most of our decisions, we are not betting against another person. Rather, we are betting against all the future versions of ourselves that we are not choosing.

The potency of fake news is that it entrenches beliefs its intended audience already has, and then amplifies them. The Internet is a playground for motivated reasoning.

Incorporating percentages or ranges of alternatives into the expression of our beliefs means that our personal narrative no longer hinges on whether we were wrong or right but on how well we incorporate new information to adjust the estimate of how accurate our beliefs are.

By saying “I’m 80%” and thereby communicating that we aren’t sure, we open the door for others to tell us what they know. They realize they can contribute without having to confront us by saying or implying “you’re wrong.”

Chapter 3: Bet to Learn: Fielding the Unfolding Future

What are the obstacles in our way that make learning from experience so difficult?

To reach our long-term goals, we have to improve at sorting out when the unfolding future has something to teach us, and when to close the feedback loop.

Instead of feeling bad when we have to admit a mistake, what if the bad feeling came from the thought that we might be missing a learning opportunity just to avoid blame?

Chapter 4: The Buddy System

Members of a decision pod can be formed by anyone where members can talk about their decision making. Forming or joining a group where the focus is on thinking in bets means modifying the usual social contract.

After 9/11, the CIA created “red teams” that are dedicated to arguing against the intelligence community’s conventional wisdom and spotting flaws in logic and analysis.

A growing number of businesses are implementing betting markets to solve for the difficulties in getting and encouraging contrary opinions

Chapter 5: Dissent to Win

Ideal-type model of self-correcting epistemic community

Chapter 6: Adventures in Mental Time Travel

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.

Prospective hindsight — imagining that an event has already occurred — increases the ability to correctly identify reasons for future outcomes by 30%

Premortem: an investigation into something awful, but before it happens. Imagining a headline “We Failed To Reach Our Goal” challenges us to think about ways in which things could go wrong that we otherwise wouldn’t if left to our own devices.