Let’s return to my extended review of Annie Duke’s beautiful book “Thinking in Bets,” shall we? Thus far, we have seen how a personal betting syndicate, one committed to a certain set of values, can help improve the quality of your decisions, but what if you are unable or unwilling to join such a betting syndicate? Annie Duke concludes her beautiful book “Thinking in Bets” with several second-best decision-making strategies in Chapter 6. These mental strategies are second-best ones because they do not involve actual bets or betting behavior; yet they are nevertheless worth giving a try, for they help us promote probabilistic thinking. For brevity’s sake, I shall review only two such mental strategies here. One such second-best strategy is the deliberate use of Bayesian penalties. Duke likens this method to a “decision swear jar” (pp. 204-207) because you have to pre-commit to a schedule of well-defined penalties (like $5 per infraction) that come into play whenever you find yourself committing a common or venal mental sin, like motivated reasoning or self-serving bias. In addition, you could pre-commit to paying a bigger penalty every time you utter words or phrases inconsistent with probabilistic thinking; for example, words like “you are 100% wrong” or “I’m 100% right” could trigger a double-penalty. For my part, for this method work, the penalty must be especially unpleasant and painful, like agreeing ahead of time to forward the total proceeds of the penalty to a politician or lobby group you oppose.
Another second-best but ingenious strategy is a variant of retrodiction or mental time travel. In the context of decision making, retrodiction is a form of mental time travel in which you imagine a possible outcome and then work your way backwards one step at a time in order to identify the steps that led to that particular outcome. For her part, Duke labels this mental strategy “backcasting” (pp. 218-221) and “postmortems” (pp. 221-226), depending on whether the outcome we are imagining is a good or bad one, but this time travel method is the same in either case. In Annie Duke’s eloquent words (p. 226), the goal is to “get our past-, present-, and future-selves to hang out together.”
Although these alternative mental strategies are second-best ones, since they do not involve actual bets or wagering, they at least help us think in probabilistic turns. Stay tuned: I will conclude my review of “Thinking in Bets” with some final thoughts in my next post.
