#60 - Annie Duke, decision strategist: Poker as a model system for life—how to improve decision making, use frameworks for learning, and apply ‘backcasting’ to boost your odds for future success
Jul 1, 2019
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Annie Duke, a former World Series of Poker champion and author of "Thinking in Bets," dives into the art of decision-making. She discusses how poker serves as a unique model for evaluating choices in uncertain situations, blending luck and skill. Duke emphasizes the importance of embracing all decision-making scenarios, rather than only focusing on negative outcomes. Introducing concepts like 'backcasting,' she offers strategies for setting long-term goals while recognizing the role of cognitive biases. Tune in for insights that apply across various fields from business to sports!
Poker combines skill and luck, influencing short-term and long-term outcomes differently.
New players in poker may face initial disadvantages but can surprise opponents with unique strategies.
Aggressive poker play can deceive opponents initially but adjustments are crucial for sustained success.
Quitting strategically in poker is beneficial, akin to promoting efficient decision-making in diverse activities.
Evaluating decisions in poker based on outcomes helps refine strategies and acknowledge the role of chance.
Post-match analysis in poker is vital for continuous learning, focusing on both wins and losses for skill improvement.
Deep dives
Understanding Poker Hands in Texas Holdem
In poker, players aim to make the best five-card hand from a combination of seven cards. The highest hand is a royal flush, while the lowest is having no matching cards. Different poker games have varying hand rankings, with a straight flush being rare. Texas Holdem involves two private cards and five community cards, allowing players to assess possible hands based on all revealed cards.
The Role of Skill and Luck in Poker
Poker is a game that blends skill and luck, where long-term results are shaped by skill while short-term outcomes may involve luck. Skill in poker entails understanding the probabilities associated with hands and the behaviors of opponents. Through probability calculations and behavioral analysis, players evaluate the strength of their hands relative to the community cards and other players.
Variable Reinforcement and Decision Making in Poker
Poker involves a variable reinforcement schedule where the outcomes are probabilistic and influenced by players' decisions. The uncertainty in poker introduces challenges similar to variable reinforcement seen in rat behavior studies. Players must navigate the balance of skill, luck, and strategic decision-making to achieve success in poker games.
New Players and Ranging in Poker Games
Newcomers to poker games may initially have a disadvantage in terms of being ranged by experienced players due to unfamiliarity with their playing styles. However, unique strategies or behaviors exhibited by new players can sometimes lead to unexpected success until they are more thoroughly understood by the existing player group.
Exploring Unexpected Situations and Adaptation in Poker
Playing aggressively and utilizing unorthodox strategies can initially lead to success in poker as opponents misjudge moves. However, adjustments by opponents often result in losses for the aggressive player. This phenomenon is akin to a lesser-known cyclist unexpectedly winning a race stage due to the peloton underestimating the competitor. In poker, understanding opponents' hands and optimal plays based on probabilistic calculations is crucial. Exploring various betting scenarios and card outcomes guides decision-making during a game. Encouragingly, players are allowed to fold and quit if a hand presents negative expected value.
Navigating Loss Aversion and Decision-Making in Poker
In poker, players can cut their losses by folding strategically, akin to the benefits of quitting advocated in other endeavors. The reluctance to quit, particularly when continuing yields negative outcomes, can have significant opportunity costs. Embracing a 'quit fast' approach allows individuals to explore diverse activities with minimal risks, promoting efficient decision-making and prioritizing positive outcomes.
Evaluating Luck and Decision Outcomes in Poker Strategies
In poker, players face the challenge of assessing decision quality based on outcomes. Winning a hand may not always indicate a correct decision, as luck can influence results. Examining a matrix of decision process and outcome quality can lead to deeper insights. Furthermore, distinguishing between good decisions with bad outcomes and vice versa is essential for refining poker strategies and acknowledging the role of chance in gameplay.
Embracing Transparency and Learning in Poker Matches
Engaging in post-match analysis and focusing on improving decision-making after both favorable and unfavorable outcomes is crucial in poker. While players often scrutinize losses to identify mistakes and enhance skills, they should equally explore unexpected victories to uncover potential flaws or missed opportunities. Balancing the assessment of decisions with varying outcomes fosters a comprehensive understanding of poker play and fosters continuous learning and adaptation.
Understanding the Impact of Skill and Luck
The podcast explores the intricate relationship between skill and luck, focusing on decisions and outcomes in activities like shooting or poker. It delves into the importance of analyzing performance based on skill and luck factors. By comparing good and bad outcomes with decision-making, the podcast emphasizes the necessity of recognizing the transient nature of success and exploring what contributes to exceptional performance.
The Significance of Examining Wins and Losses
The episode highlights the importance of scrutinizing wins and losses beyond surface explanations. It contrasts the different levels of thinking when assessing outcomes, from attributing wins solely to luck to evaluating both luck and skill. By delving into the depths of wins and losses, the podcast stresses the value of examining decision-making processes and acknowledging the nuances that lead to success or failure.
Applying Backcasting for Optimal Decision-Making
A key concept discussed is 'backcasting,' a method involving reverse engineering to analyze past decisions leading to successes or failures. The podcast presents the idea of envisioning future goals, such as physical abilities at age 100, and working backwards to understand necessary steps. By employing backcasting, individuals can navigate decision-making processes by considering both skill-based choices and unforeseen luck factors, ultimately enhancing their strategic planning and long-term outcomes.
In this episode, former World Series of Poker champion and author, Annie Duke, explains how poker is a pertinent model system for decision making in the real world, a system which blends imperfect information with some unknown percentage of both luck and skill. We go through the decision-making matrix, and how we spend most of our energy focusing on just one of the four quadrants at the expense of the learning opportunities that come from the other 75% of situations. Annie also shares how this evaluation of only the bad outcomes (and our tendency to judge others more harshly than ourselves in the face of a non-status quo decision), leads individuals, leaders, and teams to avoid bad outcomes at all costs. This avoidance is at the cost of the types of decisions which lead to progress and innovation both personally, and societally, across many realms from poker to sports to business to medicine. We also dive deep into a framework for learning, and the levels of thought required to rise to the top of a given domain. Finally, we talk about something that resonated deeply with me in terms of how I think about extending healthspan, which is the concept of “backcasting”.
We discuss:
Annie’s background, favorite sports teams, and Peter’s affinity for Belichick [7:30];
Chess vs. poker: Which is a better metaphor for decision making in life (and medicine)? [12:30];
Thinking probabilistically: Why we aren’t wired that way, and how you can improve it for better decision making [18:15];
Variable reinforcement: The psychological draw of poker that keeps people playing [25:15];
The role of luck and skill in poker (and other sports), and the difference between looking at the short run vs. long run [38:00];
A brief explanation of Texas hold ‘em [47:00];
The added complexity of reading the behavior of others players in poker [53:15];
Why Annie likes to “quit fast”, and why poker is still popular despite the power of loss aversion [58:30];
Limit vs. no limit poker, and how the game has changed with growing popularity [1:01:00];
The advent of analytics to poker, and why Annie would get crushed against today’s professionals [1:10:30];
The decision matrix, and the ‘resulting’ heuristic: The simplifier we use to judge the quality of decisions —The Pete Carroll Superbowl play call example [1:16:30];
The personal and societal consequences of avoiding bad outcomes [1:27:00];
Poker as a model system for life [1:37:15];
How many leaders are making (and encouraging) status-quo decisions, and how Bill Belichick’s decision making changed after winning two Super Bowls [1:41:00];
What did we learn about decision making from the Y2K nothingburger? And how about the D-Day invasion? [1:46:30];
The first step to becoming a good decision maker [1:48:45];
The difference between elite poker players and the ones who make much slower progress [1:55:30];
Framework for learning a skill, the four levels of thought, and why we hate digging into our victories to see what happened [1:58:15];
The capacity for self-deception, and when it is MOST important to apply four-level thinking [2:06:15];
Soft landings: The challenge of high-level thinking where there is subtle feedback and wider skill gaps [2:16:45];
The benefits of ‘backcasting’ (and doing pre-mortems) [2:19:30];
Parting advice from Annie for those feeling overwhelmed (and two book recommendations) [2:28:30]; and
