Please Find below our key points from this fantastic talk on human psychology by Annie Duke. (Emphasis Ours)
Annie Duke is one of the most influential people in the field of decision making. She has won numerous poker championships and has a PHD from University of Pennsylvania in the field of psychology. She learnt some crucial lessons when she started immersing herself in the game of poker.
She learnt that the game of poker gives you a lot of feedback but we are not able to learn from those feedbacks.
She was told when she was immersing herself in psychology that you learn better when you operate under the environment which gives you feedback on the spot and which helps you learn quickly; but she observes in poker that this is simply not the case even after receiving feedback spontaneously we are not able to improve our decision making.
Because of such observations she thought to immerse herself in understanding the nuances of decision making and answer questions like understanding the dynamics associated with decision making in uncertainty.
Annie Duke talks about one of the prominent problems in decision making which is uncertainty.
Uncertainty comes from two places; one is hidden information and other is the element of luck.
Another problem that she talks about is how our brains are wired for two types of errors. The first one is Type 1 error and the other is a Type 2 error.
Type 1 error is basically a false positive which happens many times in our lives. Our brain finds a causal relation where there exists none. Type 2 error is basically a false negative.
The second form of problem that she discusses is related to how we have evolved from the culture of small tribes. We have built our instincts from the tribal culture and as we go through a globalised world we realise more and more of this problem. Because we are wired for a small setting it is difficult for us to comprehend large and diverse setting.
Another problem that she talks about is that we have a tendency to affirm our priors. This is the classical problem of confirmation bias wherein we reinforce ideas that we already believe in.
So the idea of false positives and tribal culture really makes it difficult to separate wheat from the chaff.
She talks about motivated reasoning which means that the incentives are structured in a way, (which are not only monetary in some sense) that we consciously ignore the information which disconfirms our existing notions and also sometimes go out of our way to discredit it.
The motivated reasoning fallacy also involves not going out of our way in discrediting existing information which we believe already.
She keeps on talking about how the notion of tribe has the capacity to limit us in some sense because a sense of tribe gives us uniqueness and a distinct identity. The notion of tribe gives us some set of rules and arrangements to abide by. When we define certain rules for ourselves, we stop ourselves from absorbing new information. It gives a sense of comfort to our belief system.
She now gives an important distinction between epistemic bubbles and echo chambers. An epistemic bubble is when you have some information and not the other information but when you encounter new information you absorb it right away but we don’t live in epistemic bubbles instead we live in echo chambers.
An echo chamber is something where you are consciously ignoring other information because of your biases; so if you get information that you disagree with and which comes out of the trusted group which you already believe in than you will automatically ignore it.
She says that every decision that you take in life which involves uncertainty is like a bet. Whether you are taking a new job or want to settle to a new country or just stay at home for a while all will involve its own set of outcomes. Each decision will have its own set of timelines and outcomes which will shape your life in certain sense.
She talks about a problem which all of us face on a daily basis known as resulting. Resulting is basically judging the quality of decisions based on a result which was once considered an outlier.
When we are making a decision based on uncertainty there will be times when the least probable outcome will happen which we have no control over and to judge the decision making for that would be unfair. Only two aspects can really help us in being successful in our life one is luck and the other is quality of our decision making.
Try to separate an outcome from good quality decision making only then it would be possible to make decisions which we have control over. Decision making can be better done in groups because your own biases will then be questioned and it will encourage you to look at it rationally and think about it critically.
In life and in poker it is important to always re-evaluate your decision making and to make changes wherever needed. The ability to look at your own decision making objectively is very important.
It is also important to be aware of the action fallacy no matter what. Action fallacy prompts us to make decisions when they are not needed really. It is important in poker as well as in life that indecision should be looked at with same importance as decision making. When you play, play big otherwise staying still is okay.
She says that when you label a bad outcome just on the basis of luck you won’t learn much from it. You need to constantly ask yourself where you made mistakes and upgrade your stance based on the learnings from the mistakes.
She wants us to understand that don’t take any decision in isolation rather question the pattern from which this decision comes from. If you are taking a decision to stay where you are question the subtle element of that decision. Evaluating each decision is not necessary but having a fair idea of it is necessary.
Each decision that you will take treat it as a bet because than it will make you question the hidden elements of it.