Review of Chapter 5 of “Thinking in Bets” by Annie Duke
In our previous post, we described Annie Duke’s unorthodox suggestion to her readers in Chapter 4 of her book “Thinking in Bets.” To sum it up, if you want to improve your decisions, create your own personal “betting syndicate”; join a group of trusted intellectual friends who are willing to take each other’s bets. Building on the work of the legendary Robert K. Merton (pictured below), the next chapter (Ch. 5) identifies a set of fundamental betting norms–three normative values that you and the members of your betting syndicate should espouse and adhere to. (Duke discusses four values, but I have pared down this list to three.) Ordinarily, however, whenever we think of bets or betting syndicates, moral duties are rarely the first thing that comes to mind. One of Annie Duke’s contributions to the literature on probabilistic thinking is to identify a set of moral values that good bettors should live by.
First and foremost is the value of nuance (what Annie Duke calls “organized skepticism”), or in Duke’s own words (p. 68), “What if, in addition to expressing what we believe, we also rated our level of confidence about the accuracy of our belief on a scale of zero to ten?” By nuance, then, I mean that the fellow members of your personal betting syndicate should embrace uncertainty: they should not only be willing to take your bets; they should also require you to express your level of confidence in your bets. In other words, whether or not you believe that a particular proposition or given allegation is true, you should always strive to express the level of confidence or degree of belief you have in that proposition or allegation. For example, let’s say someone asks you whether the NBA or Major League Baseball will resume play by July 1. How strong or weak is your belief in this possibility? (Note: In addition to pages 169-171 of Chapter 5, pages 68-72 in Chapter 2 are also worth re-reading in this regard.)
Another essential betting norm is what I shall refer to as “the rule of three” or what Duke labels “disinterestedness” (see pp. 164-169). Ideally, your personal betting syndicate should contain at least three members: two to disagree and one to referee. This value is just a friendly reminder that motivated reasoning is not only a danger for individuals; it can also poison groups as well. The rule of three also makes good practical sense: every bet requires at least two parties: A, a bettor, i.e. the person who is placing the bet, and B, a bookie, the person who is taking the bet. In addition to these two main parties, it is also a good idea to appoint a neutral referee (a person with no stake in the outcome of the bet) to help write up the precise terms of the bet and to mediate any possible dispute about the bet that might occur later in time.
Yet another fundamental betting norm is “show your work.” As an aside, Duke refers to this value as “data communism” (see pp. 155-160), but communism has such an ugly connotation that I prefer to call it “show your work” or the “share and share alike” rule. Simply put, every member of your personal betting syndicate must not only disclose any information or evidence relevant to a possible bet; he must also disclose the source of that information or evidence. Put another way (in Kantian terms), you and the fellow members of your betting syndicate have a moral duty to share all relevant information with the entire group. In fact, it is actually in your self-interest to provide full disclosure. Why? Because whenever you make a bet, the more feedback you receive, the better bets you will make. A good bet, like a good decision, is an informed one, i.e. one based on all the available evidence.
This concludes my review of Chapter 5. We will turn to the last chapter (Ch. 6) and bring our review of “Thinking in Bets” to a conclusion in the next day or two …