Decision-Making Psychology Business

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

by Annie Duke

In Super Bowl XLIX, with 26 seconds left and the ball on the 1-yard line, Seattle Seahawks coach Pete Carroll called a pass play instead of handing off to his star running back. The pass was intercepted, and they lost the game. It's widely considered the worst play call in NFL history. But was it the worst decision? The answer reveals the single biggest mistake we all make: judging a decision solely by its outcome.

Your Great Decision Might Still Lead to a Bad Outcome

We have a powerful bias to equate the quality of a decision with the quality of its outcome, a mistake called 'resulting.' A good decision is about the process, not the result, because luck and incomplete information always play a role.

The infamous Super Bowl pass play had a low probability of interception (around 2%), while a run play against the Patriots' formidable goal-line defense was not a guaranteed success. The process behind the decision may have been sound, even though the result was disastrous. Judging the call as 'bad' because it failed is a classic case of resulting.

The Smartest People Say 'I'm Not Sure'

Instead of seeing the world in black and white, we should express our beliefs as probabilities. Stating your confidence as a percentage (e.g., 'I'm 70% sure') forces you to confront uncertainty, making you more accurate, credible, and open to new information.

A doctor who says, 'I'm 80% sure this is the correct diagnosis,' is better than one who says, 'I know what this is.' The probabilistic statement invites further testing to account for the 20% uncertainty, leading to better medical outcomes than blind overconfidence.

Use 'Mental Time Travel' to Defeat Your Biases

Our brains are wired for immediate gratification, often at the expense of our future selves. To counteract this, we can use mental exercises to connect with our future, such as imagining the consequences of our choices in 10 minutes, 10 months, and 10 years.

To avoid a business failure, conduct a 'premortem.' Imagine it's a year from now and your new project has failed spectacularly. Write down every reason why it failed. This exercise bypasses your current optimism and forces you to anticipate and mitigate real-world obstacles before they happen.

Seek Out Dissent with a 'Decision Buddy'

We are naturally biased to seek information that confirms our beliefs. To improve, we must actively seek out disagreement. Forming a small group or finding a partner dedicated to truth-seeking helps expose our blind spots and challenge our assumptions.

Before making a big investment, you might tell a friend, 'I'm thinking of buying this stock. Tell me why I shouldn't.' This simple framing changes the social script from seeking validation to genuinely requesting a rigorous critique of your reasoning, leading to a much stronger decision process.

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