In a coin flip, double or nothing on $100 is just as riskier. When you're losing the 100, you want to keep going. You don't want to quit and just give me the 100. So there's a study that Alex Emus did with some collaborators where he was looking at retail investors. People cancel both orders, both types of orders, but for different reasons. The emotion comes into play so quickly of like, what do I have to lose? And thinking about that differently, it does start to color judgment.
Annie Duke: Quit
Annie Duke is an author, corporate speaker, and consultant in the decision-making space, as well as Special Partner focused on Decision Science at First Round Capital Partners, a seed stage venture fund. Her previous book, Thinking in Bets, is a national bestseller. As a former professional poker player, she has won more than $4 million in tournament poker. During her career, Annie won a World Series of Poker bracelet and is the only woman to have won the World Series of Poker Tournament of Champions and the NBC National Poker Heads-Up Championship. She retired from the game in 2012. Prior to becoming a professional poker player, she was awarded a National Science Foundation Fellowship to study Cognitive Psychology at the University of Pennsylvania.
Annie is the co-founder of The Alliance for Decision Education, a non-profit whose mission is to improve lives by empowering students through decision skills education. She is a member of the National Board of After-School All-Stars and the Board of Directors of the Franklin Institute. She also serves on the board of the Renew Democracy Initiative. Annie is the author of Quit: The Power of Knowing When to Walk Away*.
We’ve all heard the lie that, “Winners never quit and quitters never win.” In reality, one of the best practices to develop is how to recognize more quickly when you should quit something that’s not working. In this conversation, Annie and I discuss how to set kill criteria for yourself and frame goals in more helpful ways to know when quitting is the best answer.
Key Points
Kenny Rogers was right; professional poker players know that a big part of success is quitting approximately 75% of the time.
“Quit while you’re ahead” is often poor advice since we tend to quit too early when good things are happening. On the contrary, we tend to quit too late when we’ve accumulated sunk cost.
Determine kill criteria in advance when you’re not as likely to be swayed by the emotions of the moment. The best criteria contain both a state and a date.
Find someone who loves you but doesn’t care about your feelings. Trust and permission are essential to open up these kinds of conversations.
Effective goals include at least one “unless…”
Resources Mentioned
Quit: The Power of Knowing When to Walk Away* by Annie Duke
Interview Notes
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Related Episodes
How to Pivot Quickly, with Steve Blank (episode 476)
The Way to Make Better Decisions, with Annie Duke (episode 499)
How to Build Confidence, with Katy Milkman (episode 533)
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