Thinking in bets by Annie Duke is one of the better books I’ve read recently.
This is Part 2 of a multi-part summary. Read Part 1 here.
Here are some of the concepts I liked:
Biases come from beliefs. Our beliefs then to interfere with our decisions.
For instance, if you were to predict if your friend will go bald or not?
What’s the first thing you will do to predict that? Most of us will ask if his/her grandfather was bald or not? There has been studies that prove that its more complicated than that.
Instead of altering our beliefs to fit new information, we do the opposite, altering our interpretation of that information to fit our beliefs.
This is how we think we form abstract beliefs:
1. We hear something;
2. We think about it and vet it, determining whether it is true or false; only after that
3. We form our belief.
It turns out, though, that we actually form abstract beliefs this way:
1. We hear something;
2. We believe it to be true;
3. Only sometimes, later, if we have the time or the inclination, we think about it and vet it, determining weather it is, in fact, true or false.
Confirmation bias is our tendency to cherry-pick information that confirms our existing beliefs or ideas.
Ask “wanna bet?”, it forces you to explore your beliefs and examine your biases towards the statement.
We would be better served as communicators and decision makers if we are less focused about weather we are confident in our beliefs and pay more attention on how confident we are about that belief.
Rate your confidence level along with your beliefs on a scale from 0 to 9. 0 being lowest confidence, and 10 being highest.
Also think about the plausibility of events. Range of possible outcome along with confidence level. Lesser the information about a topic more luck is involved and so the wider range of outcomes.
There is no sin in finding out evidence that contradicts what we believe. the Only sin is in not using that evidence as objectively as possible to refine what believe going forward
“Chalkup an outcome to skill and we take credit for the result. Chalkup result to luck and it wasn’t in our control.”
We don’t learn from our experiences well. We take credit for good outcomes and blame the bad ones on luck.
Outcomes are not on this hundred percent luck or skill.