Annie Duke on Why We Judge Decisions by Results, Not Logic [From the Archive]

Episode Description:

A good outcome does not necessarily mean you made a good decision.

And a bad outcome does not necessarily mean you made a bad one.

That distinction is at the heart of James’s conversation with Annie Duke, former professional poker player and author of Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts.

Poker gave Annie an unusually intense laboratory for studying uncertainty. You can make exactly the right decision and lose money. You can make a terrible decision and win. If you judge yourself only by the result, you may reinforce bad habits, discard good strategies, and learn the wrong lesson entirely.

James connects this immediately to business, investing, comedy, relationships, and his own experience selling a company during the dot-com boom. When things work out, people naturally want to take credit. When things go badly, they naturally want to blame luck.

Both reactions interfere with learning.

Annie argues that one of the most valuable skills is learning to separate what you controlled from what you did not. Instead of asking only, “Did I win?” ask whether the process that produced the result was sound.

The conversation then becomes an exploration of how to learn faster.

Annie says one of the best shortcuts is to “borrow other people’s 10,000 hours.” When she entered professional poker, her brother had already spent years around players like Erik Seidel and Dan Harrington. Instead of rediscovering everything through expensive trial and error, Annie entered a community that had already spent thousands of hours thinking about the game.

But being around experts is not enough.

You have to know how to talk to them. You have to communicate the relevant details. You have to remove the outcome when asking for advice so it does not bias the conversation. And you have to find people willing to challenge you instead of simply confirming what you already believe.

Annie describes three essential commitments for a strong decision-making group: a commitment to accuracy, accountability for your beliefs, and openness to dissent.

James and Annie also explore the role of teaching. Annie says her own poker game changed dramatically once she had to explain her strategies to students. If you cannot clearly explain why you believe something, you may not understand it nearly as well as you think.

The second half of the episode turns toward practical decision-making.

Annie explains mental time travel: instead of allowing the emotion of the present moment to dominate a decision, imagine how your future self will view it. A $100 gambling win can feel terrible if you were previously up $2,000, while a $100 loss can feel great if you were previously down $2,000. But one year later, you would simply prefer the $100 win.

Perspective changes the decision.

James adds his own variation: “situation traveling.” If he cannot see a personal problem clearly, he asks what advice he would give his daughter or how he would handle the same situation in business.

They also discuss pre-mortems, negative visualization, planning for obstacles, parenting, “yes, and,” self-serving bias, echo chambers, and the value of saying “I’m not sure.”

For Annie, uncertainty is not weakness.

It is the beginning of curiosity.

And curiosity is what makes learning possible.

Editorial Note:

This is a From the Archive episode originally centered on the 2018 release of Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts. Annie has since published How to Decide and Quit: The Power of Knowing When to Walk Away.

The episode uses Nate Silver’s 2016 U.S. presidential-election forecast to illustrate probabilistic thinking. FiveThirtyEight’s final forecast gave Hillary Clinton roughly a 71%