Annie Duke & Steve Curley, CFA: Tracking Error, Career Risk, & How to Decide
Oct 12, 2020
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Annie Duke, former top poker player turned author and speaker, dives into decision-making with topics like tracking error, career risk, and combating memory creep. She discusses enhancing predictions, group decision-making, and the importance of process-focused mindset. Listen for valuable insights on making better choices.
Annie Duke emphasizes analyzing decisions independent of outcomes to combat hindsight bias.
Creating a shared identity around long-term thinking aids in resisting impulsive decisions during market fluctuations.
Calibrating forecasts and recording outcomes fosters accountability and aligns decision-making with reality.
Deep dives
Implications of Career Transition from Academia to Poker
Annie Duke transitioned from academia to professional poker due to a health issue delaying her academic career. Initially playing poker to support herself during this period, she continued professionally for 18 years. This transition was influenced by her brother's guidance and chance opportunities, leading to a successful career in poker until 2012.
Analyzing Decision-Making: Pete Carroll's Super Bowl Play
Annie Duke discusses the importance of analyzing decisions independently of final results. She uses examples from sports to highlight the distinction between decision quality and outcome quality, emphasizing the need to understand the entire decision-making process and factors involved, rather than being solely influenced by hindsight bias.
Influence of Group Dynamics on Decision-Making
Annie Duke explores the role of group dynamics and shared identity in decision-making processes. By creating a shared identity around long-term thinking and commitment to process-driven strategies, individuals can resist impulsive decisions during market fluctuations. Understanding the power of group belongingness can help individuals and teams navigate uncertainties and maintain a disciplined approach to investments.
The Importance of Calibrating Forecasts for Better Decision-Making
Calibrating forecasts is crucial for making informed decisions as it involves comparing options based on their likelihood to advance towards goals. Memory creep and resulting from outcomes can hinder learning from experience. By precisely recording forecasts and outcomes, individuals can align their decision-making process with reality, fostering a culture of accountability and continuous improvement.
Enhancing Group Decision-Making Through Divergent Opinions
Teams often believe that collective decision-making leads to better outcomes due to diverse perspectives, but research indicates that it mainly boosts confidence rather than quality. To avoid groupthink, it is essential to encourage divergent opinions within teams. Creating a pre-work exercise that collects individual forecasts before discussion helps uncover varied perspectives and enables more robust decision-making processes.
Our guest today is Annie Duke, who was previously one of the best poker players in the world and is now a renowned public speaker and best-selling author.
Our conversation is all about decision-making and there's no one better to cover the topic than her. We begin with the topics of tracking error, career risk in the NFL and in finance, and remaining process-focused over time. We then shift to discussing how to fine tune our predictions, ways we can combat memory creep and hindsight bias, and how to structure organizations to make better group decisions. If you enjoy this episode be sure to get her new book, How to Decide: Simple Tools for Making Better Choices, which is available now.
Follow Annie on Twitter at @AnnieDuke and follow her work here.
Follow the CFA Society of Orlando on Twitter at @CFAOrlandoFL
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