Capital Allocators – Inside the Institutional Investment Industry Annie Duke – Decision Making in a Crisis (Capital Allocators, EP.132)
6 snips
Apr 20, 2020 
Annie Duke, a poker legend and decision-making theorist, joins Brian Portnoy and Jonathan Novy to dive into decision-making during crises. They discuss the crucial difference between complicated and complex decisions, emphasizing timely action over certainty. Duke shares insights on preparing clients for market volatility, tackling psychological biases that drive impulsive decisions. The conversation also highlights the importance of decision-making education for children and transparent communication during stressful times, like the COVID-19 pandemic.
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Complex vs. Complicated
- Complicated decisions are solvable with enough data, like chess.
- Complex decisions, like poker or the current pandemic, have inherent uncertainty, making complete solutions impossible.
Time vs. Certainty
- Recognize the trade-off between certainty and time, especially in data-rich environments.
- Favor time over certainty when downsides increase with time, as demonstrated with COVID-19.
Hedges and Uncertainty
- The cost of hedges increases as certainty increases.
- This is illustrated by the example of fire insurance – cheaper when the risk is low, expensive during a fire.
