Annie Duke, a former World Series of Poker champion and author, dives into the complex world of decision-making. She shares her academic journey in cognitive science, drawing parallels between poker strategies and investment decisions. The conversation highlights biases like the Dunning-Kruger effect and the sunk cost fallacy, while exploring the importance of cognitive flexibility and diverse perspectives. Annie also reflects on the value of knowing when to quit, reshaping how we perceive success and failure.
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From Academia to Poker
Annie Duke's academic plan was interrupted by an illness, leading her to poker.
This unexpected career shift connected her cognitive science background to decision-making under uncertainty.
insights INSIGHT
Instinct vs. Strategy
Duke's poker success wasn't initially driven by explicit application of academic concepts.
However, her game improved significantly after consciously integrating cognitive science principles.
insights INSIGHT
Defining Expertise
In poker, "best of the best" can be specialized or adaptable.
Some excel in specific formats, while others possess deep conceptual understanding applicable to any game.
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A Little Book That Teaches You When to Quit (and When to Stick)
Seth Godin
In 'The Dip,' Seth Godin challenges traditional views on persistence and quitting. He introduces the concept of 'The Dip,' a challenging phase between starting and mastering a skill, which is necessary for growth and mastery. Godin distinguishes 'The Dip' from 'The Cul-de-Sac' (a dead-end situation) and 'The Cliff' (a risky situation), advising readers to quit the latter two but push through 'The Dip' to achieve significant rewards. The book provides practical advice on recognizing when to quit and when to stick with a project, job, or relationship, emphasizing that strategic quitting can lead to extraordinary success.
Think Again
Adam Grant
In 'Think Again', Adam Grant argues that the ability to rethink at personal, interpersonal, and collective levels is crucial in today's polarized world. He uses scientific research, personal anecdotes, and engaging stories to illustrate how people can find joy in being wrong, leverage the benefits of impostor syndrome, and cultivate environments of lifelong learning. Grant emphasizes the need to challenge our convictions, adopt a scientific mindset, and foster curiosity and humility. He provides examples of individuals who have successfully rethought their approaches, from firefighters to business leaders, and offers practical exercises for improving rethinking skills[2][4][5].
How to Decide
Annie Duke
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].
Thinking, Fast and Slow
Daniel Kahneman
In this book, Daniel Kahneman takes readers on a tour of the mind, explaining how the two systems of thought shape our judgments and decisions. System 1 is fast, automatic, and emotional, while System 2 is slower, effortful, and logical. Kahneman discusses the impact of cognitive biases, the difficulties of predicting future happiness, and the effects of overconfidence on corporate strategies. He offers practical insights into how to guard against mental glitches and how to benefit from slow thinking in both personal and business life. The book also explores the distinction between the 'experiencing self' and the 'remembering self' and their roles in our perception of happiness.
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].
This is “ReSolve’s Riffs” – live on YouTube every Friday afternoon to debate the most relevant investment topics of the day, hosted by Adam Butler, Mike Philbrick and Rodrigo Gordillo of ReSolve Global*.
“Life – and investing – are more like poker than chess”. This week we had the honor to speak to none other than Annie Duke, former World Series of Poker champion, author of “Thinking in Bets” and “How to Decide”, and thought leader in the field of decision-making. Co-hosted by our good friend Brian Portnoy (founder of Shaping Wealth), the conversation covered:
How planning for a life in academia led her into a successful poker career
Applying her background in cognitive science to advance her game – Annie’s “Aha! moment"
Not all poker is created equal – tournaments, cash games, iterations, and strategic differences
Nature vs nurture – cognitive flexibility and turning a hedgehog into a fox
Cognitive Reflection Tests and why they may indicate a larger appetite for conspiracy theories
The Dunning-Kruger effect, overconfidence and naïve realism
The pervasive influence of the sunk cost fallacy and how we might keep it in check
Group think, cognitive laziness and why most people tend to anchor to the first response they hear
We also explored the illusion of explanatory depth (and why often the answer lies within the question), the effects of tight feedback loops, and multiple applications for life and investment decisions. Towards the end we caught on to the fact that Annie had actually been incepting us with ideas from her new book all along. We had been looking forward to this conversation for some time and it exceeded our expectations.
Thank you for watching and listening. See you next week.
*ReSolve Global refers to ReSolve Asset Management SEZC (Cayman) which is registered with the Commodity Futures Trading Commission as a commodity trading advisor and commodity pool operator. This registration is administered through the National Futures Association (“NFA”). Further, ReSolve Global is a registered person with the Cayman Islands Monetary Authority.