Making Smart Decisions When You Don’t Have All The Facts with Annie Duke

The Science of Success

In this episode we discuss how to make better decisions under conditions of uncertainty. We look at “the worst call in the history of football,” discuss examples from life, business and even high stakes poker to understand how to make the best possible decisions in a a world filled with unknowns. What exactly is a good decision? Is that different than a good outcome? We look at this key question - and uncover the wisdom hidden in the reality that these two things might be completely different. All this and more with our guest Annie Duke. Annie is a professional decision strategists and former professional poker player. She has leveraged her expertise in the science of smart decision making throughout her life and for two decades was one of the top poker players in the world. She is the author of the book Thinking In Bets: Making Smart Decisions When You Don’t Have All The Facts and after being granted the National Science Foundation Fellowship, studied Cognitive Psychology at The University of Pennsylvania.How do we get create lessons from our experiences?How do we sort out the noise in the gap between decision quality and outcome quality?In poker (like life) you can make really good decision and have a really bad outcome - but that doesn’t mean that you made a bad decisionThis fuzzy relationship between decision making and outcomes can be very problematic for people “Resulting”- tying the quality of the outcome too tightly to the quality of decisionsAn unlucky / bad outcome is not the same as a bad decisionRed lights and green lights - and how they can shine a light on hidden risks to decision-makingThe only thing that matters is not the result - but the process of making decisions - because that is all we can controlIn our own lives we constantly lurch into over-reactions when we focus only on results and not on our decision-making qualityStrategy #1: Approach the world through the frame of decisions as betsWhy you should ask “Wanna Bet?” to get more clarity about a situationThere are 2 major sources of uncertainty between Decisions and OutcomesLuck/RandomnessInformation AsymmetryStrategy #2: Get other people involved in the process with youYou are really good at recognizing other people’s bias, even when you can’t see your ownWhen you’re trying to make a decision (or a bet) the person who will win is the person who has the most accurate “mental model” or model of realityStrategy #3: Try to quarantine yourself from experienceEscape the quality of the outcome and how it impacts your assessment - unless you have enough data to actually verify it Key Steps to Focusing on the Decision-Making Process Not the OutcomeEvaluate decisions prior to getting the outcomeCreate a Decision Pod of other people who can challenge your thinkingThe key to making effective decisions is to multiply the probability of the outcome by the impact/magnitude Homework #1: find a group of people who are open minded, who want to be better decision-makers, and agree together that you want to question each others thinking, not be defensive, hold each other accountable to biasHomework #2: Start listening to yourself for signals that you might be engaging in biased behavior, using the words wrong/right, should ofHomework #3: Discuss a decision with 2 different people and give them opposite “outcomes” (Tell one it went really well, tell the other it went really poorly) to get clear sense of different sides of the coin Learn more about your ad choices. Visit megaphone.fm/adchoices See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.