Poker Decision Making: Part 1
My secret wish for you, in listening to ChooseFI, has always been that beyond reaching Financial Independence, you’d also improve your life in many ways, not least of which is the ability to think more clearly.
I’m on the same journey myself. Right now, I’m re-reading Annie Duke’s Thinking in Bets—a book I consider essential for upgrading your life and decision-making.
It reminded me of two newsletter segments I wrote years ago, which I’m sharing here as Parts 1 and 2:
“Decisions are made with imperfect information and by definition are made without the benefit of hindsight. You know what you know at the time, and you try to make the best decision possible.
But you can’t know everything, and information is constantly being updated when we learn new things!
Annie Duke’s concept of “resulting” is the best way to look at this: It’s so easy to look at the result, after the fact, and try to determine if it was a good or bad decision merely from the nature of the outcome (good or bad).
That is a fundamentally incorrect way of approaching life. You need to look at the quality of your decision and seek out sources of information that will help with that process.
Poker is a great illustration of this: You can have the best hand, play it perfectly and still lose. Does that mean you made a bad decision(s)? Or was it just a bad outcome due to chance, but the decision-making process was one you’d repeat?
The worst-case scenario of all is making up your mind and refusing to change regardless of what new information comes in. “Flip flopper” is one of those terms that makes my blood boil, because it’s viewed as a negative, whereas we should all aspire to change our minds when we evaluate new information and understand the world a little better.
I’m reading the book “Think Again” by Professor Adam Grant, and an interaction he had with Nobel Prize-winning Psychologist Daniel Kahneman was particularly illustrative:
“Later, I sat down with Danny for lunch and asked him about his reaction. It looked a lot to me like the joy of being wrong – his eyes twinkled as if he was having fun. He said that in his eighty-five years, no one had pointed that out before, but yes, he genuinely enjoys discovering that he was wrong, because it means he is now less wrong than before.”
Kahneman went on to say, “being wrong is the only way I feel sure I’ve learned anything. I change my mind at a speed that drives my collaborators crazy. My attachment to my ideas is provisional. There’s no unconditional love for them.”
Another way I’ve heard this put is “strong convictions, loosely held.”
Be open-minded, try to learn new things and continue updating your understanding of the world.“