Making Smarter Decisions When You Don't Have All the Facts
A big favorite among investors these days.
Thinking in Bets by Annie Duke is a book that helps readers make better decisions, especially when outcomes are uncertain. It’s for anyone facing tough choices—like business leaders or anyone dealing with high-risk situations. The book asks, How can we make smarter decisions when we don’t know what will happen next?
The problem is, we often make decisions based on gut feelings, biases, or incomplete information. We think we can predict outcomes, but when things don’t go as planned, we blame ourselves. Duke argues that the outcome doesn’t always reflect the quality of a decision. What matters is how we made the choice based on the information we had at the time.
One key idea from the book is to think in bets. Duke suggests treating decisions like bets—estimating the likelihood of different outcomes. This helps us make more informed, less biased choices. Poker players are good at this because they calculate odds and adjust as they get more information.
Another important point is understanding that outcomes don’t always show whether a decision was good or bad. Duke calls this the “resulting fallacy.” Just because something works out well doesn’t mean it was the best decision, and vice versa. The process of making the decision matters more.
Duke also highlights how emotions can cloud our judgment. She explains how poker players learn to keep their emotions separate from their decisions, which helps them stay calm and make better choices.
In short, Thinking in Bets teaches readers to think probabilistically, focus on the decision-making process, and avoid judging decisions solely by their results. This approach can help anyone make smarter, more thoughtful choices, whether in business or everyday life.
Download the app Now
