Why life is like poker

Review of Chapter 1 of “Thinking in Bets” by Annie Duke

Chapter 1 of “Thinking in Bets” concludes with this pithy phrase: “… you’ve been betting all along.” These five words not only capture one of Annie Duke’s main ideas; they also sum up why probabilistic thinking is so essential to every aspect of our lives. Simply put, the world is rarely black and white. Why? Because of the problem of incomplete information, which introduces various levels of uncertainty into almost every decision we make. Unlike a game of complete information like chess, where all the pieces are in plain sight and where the rules are well-defined and apply equally to both sides, real life strategic situations (such as business competition, romance, or career choices) are more like the game of poker, a game of incomplete information. In the popular Texas hold’em version of poker, for example, each player is dealt two private cards, while the distribution of the five community cards (such as those pictured below) is entirely probabilistic. (If you have never played poker before, here is a fun video tutorial via pokernews.com.)

As an important aside, there is another big reason why real life is less like chess and more like poker, i.e. a game involving various levels of uncertainty. Whenever we break a rule or attempt to engage in cheating in real life, there is some positive probability that we won’t get caught, or if we do get caught, that we won’t get punished. Sometimes the rules are unclear, or even if they are clear, they might be applied unevenly or unfairly for reasons beyond our control. The point is that the law itself is often highly probabilistic, so a decision to cheat or break the rules is very much like placing a bet. Although the particulars of each of our bets will depend on various factors, such as our level of uncertainty and the stakes involved, the main point Annie Duke is making here is that life is more like poker than chess: whenever we make a decision (big or small), we are in reality placing a bet on the future. Stay tuned; we will proceed to Chapter 2 in our next post …

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About F. E. Guerra-Pujol

When I’m not blogging, I am a business law professor at the University of Central Florida.
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