Book Summary – Thinking in Bets-1

Thinking in bets by Annie Duke is one of the better books I’ve read recently.
This is Part 1 of a multi-part summary.
Here are some of the concepts I liked:

Hindsight bias:
Hindsight bias is a term used in psychology to explain the tendency of people to overestimate their ability to have predicted an outcome that could not possibly have been predicted.

Hindsight bias helps us become less accountable for our decisions, less critical of ourselves, and over-confident in our ability to make decisions.
It is also called “knew-it-all-along” phenomenon.

Two types of thinking:
We usually make decision using 2 types of thinking systems, Kahneman categorizes them as System 1 and System 2 thinking.

System 1 vs System 2
Credit: http://upfrontanalytics.com/

Make sure you are using the correct system of thinking for the decision that you have to make. Don’t use System 1 or Fast thinking when making a major, life changing decision.

All decisions are bets.

Think in probabilities, an event with small chance of happening has a non zero chance of happening so, beware, it can happen.

Think about opportunity costs.

Resulting

2 thoughts on “Book Summary – Thinking in Bets-1

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