We Study Billionaires - The Investor’s Podcast Network

RWH015: Betting Better in Markets & Life w/ Annie Duke

38 snips

Oct 16, 2022

Annie Duke, a renowned expert in decision-making and former professional poker player, shares insights from her unique journey. She discusses the vital lessons learned from poker, such as embracing uncertainty and mastering probabilistic thinking. Annie explains how to improve decision-making in investing by recognizing cognitive biases and using structured strategies, like developing 'kill criteria' for selling assets. She emphasizes the importance of diverse perspectives and the potential pitfalls of identity and tribalism in financial decisions.

Ask episode

AI Snips

Chapters

Books

Transcript

Episode notes

ANECDOTE

From Academia to Poker

Annie Duke left academia due to illness and became a poker player after encouragement from her brother.
This career shift was unexpected and initially viewed with shame due to societal perceptions of poker in the 1990s.

INSIGHT

Poker and Investing: Embracing Uncertainty

Poker and investing share similarities in respecting uncertainty and making probabilistic decisions.
Annie Duke emphasizes the importance of distinguishing between skill and luck in both domains.

ANECDOTE

Seidel's Lesson on Rationality

Annie Duke recounts a story where Eric Seidel questioned her complaining about bad luck in poker.
Seidel's response highlighted the importance of focusing on actionable insights rather than dwelling on uncontrollable outcomes.

Get the Snipd Podcast app to discover more snips from this episode

Get the app

Perfectly Confident

How to Calibrate Your Decisions Wisely

Don A. Moore

In 'Perfectly Confident', Don A. Moore explores the importance of balancing confidence to avoid the pitfalls of overconfidence and underconfidence. He provides practical tools and insights from psychology and behavioral economics to help readers make informed decisions and achieve success. The book emphasizes the need for confidence to be grounded in reality and supported by evidence.

Irrational Exuberance

Robert J. Shiller

In this book, Robert J. Shiller examines the forces that drive market volatility, including cultural, psychological, and structural factors. He discusses how events such as technological advancements and demographic changes can precipitate market bubbles, and how these bubbles are reinforced by media coverage and 'new era' economic thinking. The book also explores psychological anchors and herd behavior, as well as attempts to rationalize market exuberance through theories like efficient markets and random walks. Shiller provides prescriptions for policy changes and investor strategies to mitigate the effects of speculative volatility.

Predictably Irrational

The Hidden Forces That Shape Our Decisions

Dan Ariely

In this revised and expanded edition of the groundbreaking New York Times bestseller, Dan Ariely uses a series of illuminating experiments to show how expectations, emotions, social norms, and other invisible forces skew our reasoning abilities. Ariely explains how we consistently overpay, underestimate, and procrastinate, and how these behaviors are neither random nor senseless but systematic and predictable. The book covers various aspects of decision-making, from the power of placebos to the effects of social and financial norms, and offers insights into how to make better decisions by understanding these irrational patterns.

The Power of Habit

Why We Do What We Do in Life and Business

Charles Duhigg

In this book, Charles Duhigg explores the science of habit formation and change. He explains the 'habit loop' consisting of a cue, a routine, and a reward, and how understanding this loop can help in changing bad habits or forming good ones. The book includes numerous examples from various fields, such as how Procter & Gamble successfully marketed Febreze, how Alcoa transformed its business by focusing on safety, and how individuals like Olympic swimmer Michael Phelps and civil-rights hero Martin Luther King, Jr. benefited from specific habits. Duhigg argues that by harnessing this science, individuals and organizations can transform their lives and businesses[2][4][5].

Richer, Wiser, Happier

How the World's Greatest Investors Win in Markets and Life

William Green

In Richer, Wiser, Happier, William Green draws on interviews conducted over twenty-five years with many of the world’s greatest investors. The book highlights that the most successful investors are mavericks and iconoclasts who question conventional wisdom and think rationally, rigorously, and objectively. They maximize their odds of long-term success in markets and life by drawing insights from diverse fields such as neuroscience, economic history, psychology, philosophy, and more. Green explains how these investors can teach us not only how to become rich but also how to improve our thinking, decision-making, risk assessment, and resilience, and how to turn uncertainty to our advantage.

Thinking in bets

Making Smarter Decisions When You Don't Have All the Facts

Annie Duke

In this book, Annie Duke teaches readers how to make better decisions by treating them as 'bets' on uncertain outcomes. She emphasizes the importance of distinguishing between the quality of a decision and its outcome, acknowledging the role of luck, and avoiding biases such as 'resulting' and hindsight bias. Duke draws on her experiences as a professional poker player and combines these with insights from cognitive psychology and other fields to provide tools for making more objective and thoughtful decisions. The book encourages readers to get comfortable with uncertainty, seek truth through diverse opinions, and learn from outcomes to improve future decision-making[1][3][5].

Range

Why Generalists Triumph in a Specialized World

David Epstein

In this book, David Epstein examines the success of generalists in various fields, including sports, arts, music, invention, forecasting, and science. He argues that generalists, who often find their path late and juggle multiple interests, are more creative, agile, and able to make connections that specialists cannot. Epstein uses stories and research studies to show that wide sampling and late specialization can be more valuable than early specialization, especially in complex and unpredictable environments. He also discusses the distinction between 'kind' and 'wicked' learning environments and the importance of balancing specialization with range for long-term success[2][4][5].

Superforecasting

The Art and Science of Prediction

Dan Gardner

Philip E. Tetlock

Santiago Foz (argentino)

In this book, Tetlock and Gardner present the results of the Good Judgment Project, a massive forecasting tournament that identified a small group of 'superforecasters' who are exceptionally good at predicting future events. The authors explain that good forecasting does not require powerful computers or arcane methods but involves gathering evidence from various sources, thinking probabilistically, working in teams, keeping score, and being willing to admit error and change course. The book uses stories of forecasting successes and failures, as well as interviews with high-level decision makers, to illustrate these principles and demonstrate how anyone can improve their forecasting abilities[3][4][5].

Quit

The Power of Knowing When to Walk Away

Annie Duke