Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts

When we move away from a world where there are only two opposing and discrete boxes that decisions can be put in—right or wrong—we start living in the continuum between the extremes. Making better decisions stops being about wrong or right but about calibrating among all the shades of grey.

Hindsight bias is the tendency, after an outcome is known, to see the outcome as having been inevitable. When we say, “I should have known that would happen,” or, “I should have seen it coming,” we are succumbing to hindsight bias.

Our goal is to get our reflexive minds to execute on our deliberative minds’ best intentions.

CHAPTER 2 Wanna Bet?

Accuracy, accountability, and diversity wrapped into a group’s charter all contribute to better decision-making, especially if the group promotes thinking in bets.

The benefits of recognizing just a few extra learning opportunities compound over time. The cumulative effect of being a little better at decision-making, like compounding interest, can have huge effects in the long run on everything that we do. When we catch that extra occasional learning opportunity, it puts us in a better position for future opp

In a way, backcasting without premortems is a form of temporal discounting: if we imagine a positive future, we feel better now, but we’ll more than compensate for giving up that immediate gratification through the benefits of seeing the world more accurately, making better initial decisions, and being nimbler about what the world throws our way.

What makes a decision great is not that it has a great outcome. A great decision is the result of a good process, and that process must include an attempt to accurately represent our own state of knowledge. That state of knowledge, in turn, is some variation of “I’m not sure.”

In poker, the bulk of what goes on is watching. An experienced player will choose to play only about 20% of the hands they are dealt, forfeiting the other 80% of the hands before even getting past the first round of betting.