The following is an excerpt from Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts by Annie Duke, in agreement with Portfolio, an imprint of Penguin Publishing Group, a division of Penguin Random House LLC. Copyright © Annie Duke, 2018.
David Grey is a high- stakes poker player and professional gambler, and a good friend. After a night at a racetrack and a bowling alley in New Jersey, David and a bunch of other bettors were hungry. It was late. Someone suggested White Castle. A discussion broke out about how many burgers the biggest eater in the group, Ira the Whale, could eat.
When they got Ira the Whale to say he could eat 100 burgers (remember, White Castle burgers are small), most of the group, not surprisingly, wanted to bet against him. David was an excep-tion. “I was a young guy, just getting started. Fifty dollars was a big win or loss for me. There was about $2,000 out against Ira the Whale. I bet $200 on him because I thought he could do it.”
When they got to White Castle, Ira the Whale decided to order the burgers twenty at a time. David knew he was a lock to win as soon as Ira the Whale ordered the ﬁrst twenty, because Ira the Whale also ordered a milkshake and fries.
After ﬁnishing the 100 burgers and after he and David collected their bets, Ira the Whale ordered another twenty burgers to go, “for Mrs. Whale.”
Accountability is a willingness or obligation to answer for our actions or beliefs to others. A bet is a form of accountability. If we’re in love with our own opinions, it can cost us in a bet. Ira the Whale held the other gamblers accountable for their beliefs about whether he could eat 100 White Castle burgers. Accountability is why John Hennigan (brieﬂy) moved to Des Moines. After spending time in that kind of environment, you become hypervigilant about your level of conﬁdence in your beliefs. No one is forced to make or take such bets, but the prospect is a reminder that you can always be held accountable for the accuracy of what you believe and say. It is truly putting your money where your mouth is.
Being in an environment where the challenge of a bet is always looming works to reduce motivated reasoning. Such an environment changes the frame through which we view disconﬁrming information, reinforcing the frame change that our truthseeking group rewards. Evidence that might contradict a belief we hold is no longer viewed through as hurtful a frame. Rather, it is viewed as helpful because it can improve our chances of making a better bet. And winning a bet triggers a reinforcing positive update.
Accountability, like reinforcement of accuracy, also improves our decision-making and information processing when we are away from the group because we know in advance that we will have to answer to the group for our decisions. Early in my poker career, my poker group recommended that a way to avoid the effects of self-serving bias when I was losing was to have a preset “loss limit”—if I lost $600 at the stakes I was playing, I would leave the game. The smart, experienced players advising me knew that in the moment of losing, I might not be my most rational self in assessing whether I was losing because I was getting unlucky or losing because I was playing poorly. A predetermined loss limit acts as a check against irrationally chasing losses, but self- enforcement is a problem. If you have more money in your pocket, you might still take it out. If you’re out of money, casinos have ATMs and machines that let you get cash advances on your credit cards. Poker players are also pretty liberal about lending money to losing players.
I was much less likely to break a loss limit because I knew I was accountable to my pod. If I reached my loss limit and my inner voice said, “This game is so good that I should put up more money and keep playing,” it also reminded me I’d have to answer for the decision to a group of players I respected. Accountability made me run that conversation in my head, in which I started explaining how I was just getting unlucky and they would expose why I was likely biased in my assessment, helping me resist the urge to buy more chips. And, after leaving a losing game and going home, I could offset some of the sting of losing by running the conversation where my pod would approve of my decision to quit the game when I told them about it.
Imagining how the discussion will go helps us to spot more errors on our own and catch them more quickly.
The group ideally exposes us to a diversity of viewpoints
John Stuart Mill is one of the heroes of thinking in bets. More than one hundred and ﬁfty years after writing On Liberty, his thinking on social and political philosophy remains startlingly current. One of the frequent themes in On Liberty is the importance of diversity of opinion. Diversity and dissent are not only checks on fallibility, but the only means of testing the ultimate truth of an opinion: “The only way in which a human being can make some approach to knowing the whole of a subject, is by hearing what can be said about it by persons of every variety of opinion, and studying all modes in which it can be looked at by every character of mind. No wise man ever acquired his wisdom in any mode but this; nor is it in the nature of human intellect to become wise in any other manner.”
There is a simple beauty in Mill’s insight. On our own, we have just one viewpoint. That’s our limitation as humans. But if we take a bunch of people with that limitation and put them together in a group, we get exposed to diverse opinions, can test alternative hypotheses, and move toward accuracy. It is almost impossible for us, on our own, to get the diversity of viewpoints provided by the combined manpower of a well-formed decision pod. To get a more objective view of the world, we need an environment that exposes us to alternate hypotheses and different perspectives. That doesn’t apply only to the world around us: to view ourselves in a more realistic way, we need other people to ﬁll in our blind spots.
A group with diverse viewpoints can help us by sharing the work suggested in the previous two chapters to combat motivated reasoning about beliefs and biased outcome ﬁelding. When we think in bets, we run through a series of questions to examine the accuracy of our beliefs. For example:
- Why might my belief not be true?
- What other evidence might be out there bearing on my belief?
- Are there similar areas I can look toward to gauge whether similar beliefs to mine are true?
- What sources of information could I have missed or minimized on the way to reaching my belief?
- What are the reasons someone else could have a different belief, what’s their support, and why might they be right instead of me?
- What other perspectives are there as to why things turned out the way they did?
Just by asking ourselves these questions, we are taking a big step toward calibration. But there is only so much we can do to answer these questions on our own. We only get exposed to the information we have been exposed to, only live the experiences we have experienced, only think of the hypotheses that we can conceive of. It’s hard to know what reasons someone else could have for believing something different. We aren’t them. We haven’t had their experiences. We don’t know what different information they have. But they do.
Much of our biased information processing stems from the amount of rope that uncertainty affords us. Well-deployed diversity of viewpoints in a group can reduce uncertainty due to incomplete information by ﬁlling in the gaps in what we know, making life start to ﬁt more neatly on a chessboard.
Others aren’t wrapped up in preserving our narrative, anchored by our biases. It is a lot easier to have someone else offer their perspective than for you to imagine you’re another person and think about what their perspective might be. A diverse group can do some of the heavy lifting of debiasing for us. A poker table is a naturally diverse setting because we generally don’t select who we play with for their opinions. Even better, when there is disagreement stemming from the diverse opinions represented at a poker table, the discussion may naturally progress toward betting on it. These are ideal circumstances for promoting accuracy.
Numerous groups have recognized the need to engineer the kind of diversity and encouragement of dissent that naturally occurs at a poker table. The State Department, since the Vietnam War, has had a formal Dissent Channel, where employees can have their dissenting views heard and addressed without fear of penalty. The American Foreign Service Association, the professional organization of f oreign- service employees, has four separate awards it gives annually to members “to recognize and encourage constructive dissent and risk-taking in the Foreign Service.” The Dissent Channel has been credited with a policy change that helped end the genocidal war in Bosnia. In June 2016, ﬁfty-one State Department employees signed a memo calling for President Obama to strengthen American military efforts in Syria. In late January 2017, approximately one thousand employees signed a dissent cable in response to President Trump’s executive order suspending immigration from seven Muslim- majority countries. The Dissent Channel represents something hopeful in our nation’s decision-making process. In an environment of increased polarization, f oreign-s ervice employees can make their voices heard about policies with which they disagree, and do it regardless of whether the administration is Democrat or Republican. Allowing dissent has a value that transcends party politics.
After September 11, the CIA created “red teams” that, ac-cording to Georgetown law professor Neal Katyal in a New York Times oped, “are dedicated to arguing against the intelligence community’s conventional wisdom and spotting ﬂaws in logic and analysis.” Senior Obama administration officials, following the raid that killed Osama bin Laden, mentioned red-team analysis among the methods used to measure the degree of conﬁ-dence that bin Laden, in the absence of visual or auditory conﬁrmation, was in the compound subject to the raid.
Dissent channels and red teams are a beautiful implementation of Mill’s bedrock principle that we can’t know the truth of a matter without hearing the other side. This commitment to diversity of opinion is something that we would be wise to apply to our own decision groups. For example, if a corporate strategy group is ﬁguring out how to integrate operations following a merger, someone who initially opposed the merger would be good to have as part of the group. Perhaps they have reasons why the two sales departments won’t mesh— whatever their reasons, they could help the majority move forward with a wiser approach by taking those reasons into account.
Diversity is the foundation of productive group decision-making, but we can’t underestimate how hard it is to maintain. We all tend to gravitate toward people who are near clones of us. After all, it feels good to hear our ideas echoed back to us. If there is any doubt about how easy it can be to fall into this conﬁrmatory drift, we can even see this tendency in groups we consider some of the most dedicated to truthseeking: judges and scientists.
Federal judges: drift happens
Cass Sunstein, now a Harvard law professor, conducted a massive study with colleagues when he was on the faculty at the University of Chicago Law School, on ideological diversity in federal judicial panels. Sunstein recognized at the outset that the U.S. Courts of Appeals are “an extraordinary and longstanding natural experiment” in diversity. Appellate court panels are composed of three judges randomly drawn from that circuit’s pool. Each circuit’s pool includes life-tenured judges chosen (when an opening occurs or Congress recognizes the need for additional judges) by the sitting president. In any particular appeal, you could get a panel of three Democrat appointees, three Republican appointees, or a two-to-one mix in either direction.
The study, encompassing over 6,000 federal appeals and nearly 20,000 individual votes, found, not surprisingly, that judicial voting generally followed political lines. Pure, unaided open-mindedness, even by life-tenured judges sworn to uphold the law, is hard.