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Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts

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Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts

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Over the course of that hand, I could be involved in up to twenty decisions. And each hand ends with a concrete result: I win money or I lose money. The result of each hand provides immediate feedback on how your decisions are faring.

Over time, those world-class poker players taught me to understand what a bet really is: a decision about an uncertain future. The implications of treating decisions as bets made it possible for me to find learning opportunities in uncertain environments. Treating decisions as bets, I discovered, helped me avoid common decision traps, learn from results in a more rational way, and keep emotions out of the process as much as possible.

The approach of thinking in bets moved me toward objectivity, accuracy, and open-mindedness. That movement compounds over time to create significant changes in our lives.

Thinking in bets starts with recognizing that there are exactly two things that determine how our lives turn out: the quality of our decisions and luck. Learning to recognize the difference between the two is what thinking in bets is all about.

Why did so many people so strongly believe that Pete Carroll got it so wrong? We can sum it up in four words: the play didn’t work.

Pete Carroll was a victim of our tendency to equate the quality of a decision with the quality of its outcome. Poker players have a word for this: “resulting.” When I started playing poker, more experienced players warned me about the dangers of resulting, cautioning me to resist the temptation to change my strategy just because a few hands didn’t turn out well in the short run.

Drawing an overly tight relationship between results and decision quality affects our decisions every day, potentially with far-reaching, catastrophic consequences. When I consult with executives, I sometimes start with this exercise. I ask group members to come to our first meeting with a brief description of their best and worst decisions of the previous year. I have yet to come across someone who doesn’t identify their best and worst results rather than their best and worst decisions.

Hindsight bias is the tendency, after an outcome is known, to see the outcome as having been inevitable. When we say, “I should have known that would happen,” or, “I should have seen it coming,” we are succumbing to hindsight bias.

The decision didn’t work out, and he treated that result as if it were an inevitable consequence rather than a probabilistic one.

We link results with decisions even though it is easy to point out indisputable examples where the relationship between decisions and results isn’t so perfectly correlated. No sober person thinks getting home safely after driving drunk reflects a good decision or good driving ability. Changing future decisions based on that lucky result is dangerous and unheard of (unless you are reasoning this out while drunk and obviously deluding yourself). Yet this is exactly what happened to that CEO. He changed his behavior based on the quality of the result rather than the quality of the decision-making process. He decided he drove better when he was drunk.

To start, our brains evolved to create certainty and order. We are uncomfortable with the idea that luck plays a significant role in our lives. We recognize the existence of luck, but we resist the idea that, despite our best efforts, things might not work out the way we want. It feels better for us to imagine the world as an orderly place, where randomness does not wreak havoc and things are perfectly predictable. We evolved to see the world that way. Creating order out of chaos has been necessary for our survival.

When we work backward from results to figure out why those things happened, we are susceptible to a variety of cognitive traps, like assuming causation when there is only a correlation, or cherry-picking data to confirm the narrative we prefer. We will pound a lot of square pegs into round holes to maintain the illusion of a tight relationship between our outcomes and our decisions.

“We have this thin layer of prefrontal cortex made just for us, sitting on top of this big animal brain. Getting this thin little layer to handle more is unrealistic.” The prefrontal cortex doesn’t control most of the decisions we make every day. We can’t fundamentally get more out of that unique, thin layer of prefrontal cortex. “It’s already overtaxed,” he told me.

The challenge is not to change the way our brains operate but to figure out how to work within the limitations of the brains we already have. Being aware of our irrational behavior and wanting to change is not enough, in the same way that knowing that you are looking at a visual illusion is not enough to make the illusion go away.

We can measure the lines to confirm they are the same length, but we can’t make ourselves unsee the illusion.

Our goal is to get our reflexive minds to execute on our deliberative minds’ best intentions.

Every hand (and therefore every decision) has immediate financial consequences. In a tournament or a high-stakes game, each decision can be worth more than the cost of an average three-bedroom house, and players have to make those decisions more quickly than we decide what to order in a restaurant.

Solving the problem of how to execute is even more important than innate talent to succeed in poker. All the talent in the world won’t matter if a player can’t execute; avoiding common decision traps, learning from results in a rational way, and keeping emotions out of the process as much as possible.

We all struggle to execute our best intentions.

Game theory is the modern basis for the study of the bulk of our decision-making, addressing the challenges of changing conditions, hidden information, chance, and multiple people involved in the decisions.

No, no,’ he said. ‘Chess is not a game. Chess is a well-defined form of computation. You may not be able to work out the answers, but in theory there must be a solution, a right procedure in any position. Now, real games,’ he said, ‘are not like that at all. Real life is not like that. Real life consists of bluffing, of little tactics of deception, of asking yourself what is the other man going to think I mean to do. And that is what games are about in my theory.’” The decisions we make in our lives—in business, saving and spending, health and lifestyle choices, raising our children, and relationships—easily fit von Neumann’s definition of “real games.” They involve uncertainty, risk, and occasional deception, prominent elements in poker. Trouble follows when we treat life decisions as if they were chess decisions.

Chess, for all its strategic complexity, isn’t a great model for decision-making in life, where most of our decisions involve hidden information and a much greater influence of luck. This creates a challenge that doesn’t exist in chess: identifying the relative contributions of the decisions we make versus luck in how things turn out. Poker, in contrast, is a game of incomplete information. It is a game of decision-making under conditions of uncertainty over time. (Not coincidentally, that is close to the definition of game theory.) Valuable information remains hidden. There is also an element of luck in any outcome. You could make the best possible decision at every point and still lose the hand, because you don’t know what new cards will be dealt and revealed. Once the game is finished and you try to learn from the results, separating the quality of your decisions from the influence of luck is difficult.

Von Neumann and Morgenstern understood that the world doesn’t easily reveal the objective truth. That’s why they based game theory on poker. Making better decisions starts with understanding this: uncertainty can work a lot of mischief.

It feels like that should be a pretty easy question to answer. Once we do the math on the probability of heads on four consecutive 50-50 flips, we can determine that would happen 6.25% of the time (.50 × .50 × .50 × .50).

Just as we have problems with resulting and hindsight bias, when we evaluate decisions solely on how they turn out, we have a mirror-image problem in making prospective decisions. We get only one try at any given decision—one flip of the coin—and that puts great pressure on us to feel we have to be certain before acting, a certainty that necessarily will overlook the influences of hidden information and luck.

We are discouraged from saying “I don’t know” or “I’m not sure.” We regard those expressions as vague, unhelpful, and even evasive. But getting comfortable with “I’m not sure” is a vital step to being a better decision-maker. We have to make peace with not knowing. Embracing “I’m not sure” is difficult. We are trained in school that saying “I don’t know” is a bad thing. Not knowing in school is considered a failure of learning. Write “I don’t know” as an answer on a test and your answer will be marked wrong.

Of course, we want to encourage acquiring knowledge, but the first step is understanding what we don’t know.

What makes a decision great is not that it has a great outcome. A great decision is the result of a good process, and that process must include an attempt to accurately represent our own state of knowledge. That state of knowledge, in turn, is some variation of “I’m not sure.”

What if we shifted our definition of “I don’t know” from the negative frame (“I have no idea” or “I know nothing about that,” which feels like we lack competence or confidence) to a more neutral frame? What if we thought about it as recognizing that, although we might know something about the chances of some event occurring, we are still not sure how things will turn out in any given instance? That is just the truth. If we accept that, “I’m not sure” might not feel so bad.

But neither the veteran nor the rookie can be sure what the next flip will look like. The veteran will just have a better guess.

Start-ups have very low chances of succeeding but they try nonetheless, attempting to find the best strategy to achieve the big win, even though none of the strategies is highly likely to create success for the company. This is still worthwhile because the payoff can be so large. There are many reasons why wrapping our arms around uncertainty and giving it a big hug will help us become better decision-makers. Here are two of them. First, “I’m not sure” is simply a more accurate representation of the world. Second, and related, when we accept that we can’t be sure, we are less likely to fall into the trap of black-and-white thinking.

If we misrepresent the world at the extremes of right and wrong, with no shades of grey in between, our ability to make good choices—choices about how we are supposed to be allocating our resources, what kind of decisions we are supposed to be making, and what kind of actions we are supposed to be taking—will suffer. The secret is to make peace with walking around in a world where we recognize that we are not sure and that’s okay. As we learn more about how our brains operate, we recognize that we don’t perceive the world objectively. But our goal should be to try.

When we think in advance about the chances of alternative outcomes and make a decision based on those chances, it doesn’t automatically make us wrong when things don’t work out. It just means that one event in a set of possible futures occurred. Look how quickly you can begin to redefine what it means to be wrong. Once we start thinking like this, it becomes easier to resist the temptation to make snap judgments after results or say things like “I knew it” or “I should have known.” Better decision-making and more self-compassion follow.

Any prediction that is not 0% or 100% can’t be wrong solely because the most likely future doesn’t unfold.

Long shots hit some of the time. Blaming the oddsmakers or the odds themselves assumes that once something happens, it was bound to have happened and anyone who didn’t see it coming was wrong.

Decisions are bets on the future, and they aren’t “right” or “wrong” based on whether they turn out well on any particular iteration. An unwanted result doesn’t make our decision wrong if we thought about the alternatives and probabilities in advance and allocated our resources accordingly, as my client the CEO and Pete Carroll both did.

When we move away from a world where there are only two opposing and discrete boxes that decisions can be put in—right or wrong—we start living in the continuum between the extremes. Making better decisions stops being about wrong or right but about calibrating among all the shades of grey.

goes out the window. Just ask Pete Carroll. Redefining wrong allows us to let go of all the anguish that comes from getting a bad result. But it also means we must redefine “right.” If we aren’t wrong just because things didn’t work out, then we aren’t right just because things turned out well. Do we win emotionally to making that mindset trade-off? Being right feels really good. “I was right,” “I knew it,” “I told you so”—those are all things that we say, and they all feel very good to us. Should we be willing to give up the good feeling of “right” to get rid of the anguish of “wrong”? Yes.

being wrong hurts us more than being right feels good.

if we follow the example of poker players by making explicit that our decisions are bets, we can make better decisions and anticipate (and take protective measures) when irrationality is likely to keep us from acting in our best interest.

defines “bet” as “a choice made by thinking about what will probably happen,” “to risk losing (something) when you try to do or achieve something” and “to make decisions that are based on the belief that something will happen or is true.”

Every decision commits us to some course of action that, by definition, eliminates acting on other alternatives. Not placing a bet on something is, itself, a bet.

In most of our decisions, we are not betting against another person. Rather, we are betting against all the future versions of ourselves that we are not choosing.

How can we be sure that we are choosing the alternative that is best for us? What if another alternative would bring us more happiness, satisfaction, or money? The answer, of course, is we can’t be sure. Things outside our control (luck) can influence the result. The futures we imagine are merely possible. They haven’t happened yet. We can only make our best guess, given what we know and don’t know, at what the future will look like.

When we decide, we are betting whatever we value (happiness, success, satisfaction, money, time, reputation, etc.) on one of a set of possible and uncertain futures. That is where the risk is.

If we can find ways to become more comfortable with uncertainty, we can see the world more accurately and be better for it.

We bet based on what we believe about the world.

Our beliefs drive the bets we make:

part of the skill in life comes from learning to be a better belief calibrator, using experience and information to more objectively update our beliefs to more accurately represent the world. The more accurate our beliefs, the better the foundation of the bets we make.

“Who here knows how you can predict if a man will go bald?”

“Does anyone know how you calculate a dog’s age in human years?”

We form beliefs in a haphazard way, believing all sorts of things based just on what we hear out in the world but haven’t researched for ourselves. This is how we think we form abstract beliefs: We hear something; We think about it and vet it, determining whether it is true or false; only after that We form our belief. It turns out, though, that we actually form abstract beliefs this way: We hear something; We believe it to be true; Only sometimes, later, if we have the time or the inclination, we think about it and vet it, determining whether it is, in fact, true or false.

People are credulous creatures who find it very easy to believe and very difficult to doubt. In fact, believing is so easy, and perhaps so inevitable, that it may be more like involuntary comprehension than it is like rational assessment.”

our default is to believe that what we hear and read is true. Even when that information is clearly presented as being false, we are still likely to process it as true.

As with many of our irrationalities, how we form beliefs was shaped by the evolutionary push toward efficiency rather than accuracy. Abstract belief formation (that is, beliefs outside our direct experience, conveyed through language) is likely among the few things that are uniquely human, making it relatively new in the scope of evolutionary time. Before language, our ancestors could form new beliefs only through what they directly experienced of the physical world around them. For perceptual beliefs from direct sensory experience, it’s reasonable to presume our senses aren’t lying. Seeing is, after all, believing. If you see a tree right in front of you, it would generally be a waste of cognitive energy to question whether the tree exists. In fact, questioning what you see or hear can get you eaten. For survival-essential skills, type I errors (false positives) were less costly than type II errors (false negatives). In other words, better to be safe than sorry, especially when considering whether to believe that the rustling in the grass is a lion. We didn’t develop a high degree of skepticism when our beliefs were about things we directly experienced, especially when our lives were at stake. As complex language evolved, we gained the ability to form beliefs about things we had not actually experienced for ourselves. And, as Gilbert pointed out, “nature does not start from scratch; rather, she is an inveterate jury rigger who rarely invents a new mechanism to do splendidly what an old mechanism can be modified to do tolerably well.” In this case, the system we already had was (1) experience it, (2) believe it to be true, and (3) maybe, and rarely, question it later. We may have more reasons to question this flood of secondhand information, but our older system is still in charge.

Even though our default is “true,” if we were good at updating our beliefs based on new information, our haphazard belief-formation process might cause relatively few problems. Sadly, this is not the way it works. We form beliefs without vetting most of them, and maintain them even after receiving clear, corrective information.

Truthseeking, the desire to know the truth regardless of whether the truth aligns with the beliefs we currently hold, is not naturally supported by the way we process information. We might think of ourselves as open-minded and capable of updating our beliefs based on new information, but the research conclusively shows otherwise. Instead of altering our beliefs to fit new information, we do the opposite, altering our interpretation of that information to fit our beliefs.

Hastorf and Cantril concluded, “We do not simply ‘react to’ a happening… . We behave according to what we bring to the occasion.” Our beliefs affect how we process all new things, “whether the ‘thing’ is a football game, a presidential candidate, Communism, or spinach.”

Whether it is a football game, a protest, or just about anything else, our pre-existing beliefs influence the way we experience the world. That those beliefs aren’t formed in a particularly orderly way leads to all sorts of mischief in our decision-making.

Flaws in forming and updating beliefs have the potential to snowball. Once a belief is lodged, it becomes difficult to dislodge. It takes on a life of its own, leading us to notice and seek out evidence confirming our belief, rarely challenge the validity of confirming evidence, and ignore or work hard to actively discredit information contradicting the belief. This irrational, circular information-processing pattern is called motivated reasoning. The way we process new information is driven by the beliefs we hold, strengthening them. Those strengthened beliefs then drive how we process further information, and so on.

reasoning tells us it’s not really the point of anyone’s story. It doesn’t take much for any of us to believe something. And once we believe it, protecting that belief guides how we treat further information relevant to the belief.

Fake news works because people who already hold beliefs consistent with the story generally won’t question the evidence. Disinformation is even more powerful because the confirmable facts in the story make it feel like the information has been vetted, adding to the power of the narrative being pushed.

Even when directly confronted with facts that disconfirm our beliefs, we don’t let facts get in the way.

we just want to think well of ourselves and feel that the narrative of our life story is a positive one. Being wrong doesn’t fit into that narrative.

Information that disagrees with us is an assault on our self-narrative. We’ll work hard to swat that threat away. On the flip side, when additional information agrees with us, we effortlessly embrace it.

It turns out the better you are with numbers, the better you are at spinning those numbers to conform to and support your beliefs.

When someone challenges us to bet on a belief, signaling their confidence that our belief is inaccurate in some way, ideally it triggers us to vet the belief, taking an inventory of the evidence that informed us. How do I know this? Where did I get this information? Who did I get it from? What is the quality of my sources? How much do I trust them? How up to date is my information? How much information do I have that is relevant to the belief? What other things like this have I been confident about that turned out not to be true? What are the other plausible alternatives? What do I know about the person challenging my belief? What is their view of how credible my opinion is? What do they know that I don’t know? What is their level of expertise? What am I missing? Remember the order in which we form abstract beliefs: We hear something; We believe it; Only sometimes, later, if we have the time or the inclination, we think about it and vet it, determining whether or not it is true. “Wanna bet?” triggers us to engage in that third step that we only sometimes get to. Being asked if we are willing to bet money on it makes it much more likely that we will examine our information in a less biased way, be more honest with ourselves about how sure we are of our beliefs, and be more open to updating and calibrating our beliefs. The more objective we are, the more accurate our beliefs become. And the person who wins bets over the long run is the one with the more accurate beliefs.

We can train ourselves to view the world through the lens of “Wanna bet?” Once we start doing that, we are more likely to recognize that there is always a degree of uncertainty, that we are generally less sure than we thought we were, that practically nothing is black and white, 0% or 100%. And that’s a pretty good philosophy for living.

Given that even scientific facts can have an expiration date, we would all be well-advised to take a good hard look at our beliefs, which are formed and updated in a much more haphazard way than those in science.

We would be better served as communicators and decision-makers if we thought less about whether we are confident in our beliefs and more about how confident we are. Instead of thinking of confidence as all-or-nothing (“I’m confident” or “I’m not confident”), our expression of our confidence would then capture all the shades of grey in between.

Forcing ourselves to express how sure we are of our beliefs brings to plain sight the probabilistic nature of those beliefs, that what we believe is almost never 100% or 0% accurate but, rather, somewhere in between.

The more we know about a topic, the better the quality of information we have, the tighter the range of plausible alternatives. (When it comes to predictions, the plausible range of outcomes would also be tighter when there is less luck involved.) The less we know about a topic or the more luck involved, the wider our range.

Incorporating uncertainty into the way we think about our beliefs comes with many benefits. By expressing our level of confidence in what we believe, we are shifting our approach to how we view the world. Acknowledging uncertainty is the first step in measuring and narrowing it. Incorporating uncertainty in the way we think about what we believe creates open-mindedness, moving us closer to a more objective stance toward information that disagrees with us. We are less likely to succumb to motivated reasoning since it feels better to make small adjustments in degrees of certainty instead of having to grossly downgrade from “right” to “wrong.” When confronted with new evidence, it is a very different narrative to say, “I was 58% but now I’m 46%.” That doesn’t feel nearly as bad as “I thought I was right but now I’m wrong.” Our narrative of being a knowledgeable, educated, intelligent person who holds quality opinions isn’t compromised when we use new information to calibrate our beliefs, compared with having to make a full-on reversal. This shifts us away from treating information that disagrees with us as a threat, as something we have to defend against, making us better able to truthseek.

There is no sin in finding out there is evidence that contradicts what we believe. The only sin is in not using that evidence as objectively as possible to refine that belief going forward. Declaring our uncertainty in our beliefs to others makes us more credible communicators. We assume that if we don’t come off as 100% confident, others will value our opinions less. The opposite is usually true.

Expressing our level of confidence also invites people to be our collaborators.

By saying, “I’m 80%” and thereby communicating we aren’t sure, we open the door for others to tell us what they know. They realize they can contribute without having to confront us by saying or implying, “You’re wrong.”

Expressing our beliefs this way also serves our listeners. We know that our default is to believe what we hear, without vetting the information too carefully. If we communicate to our listeners that we are not 100% on what we are saying, they are less likely to walk away having been infected by our beliefs. Expressing the belief as uncertain signals to our listeners that the belief needs further vetting, that step three is still in progress.

By communicating our own uncertainty when sharing beliefs with others, we are inviting the people in our lives to act like scientists with us. This advances our beliefs at a faster clip because we miss out on fewer opportunities to get new information, information that would help us to calibrate the beliefs we have.

learning occurs when you get lots of feedback tied closely in time to decisions and actions.

while experience is necessary to becoming an expert, it’s not sufficient. Experience can be an effective teacher. But, clearly, only some students listen to their teachers. The people who learn from experience improve, advance, and (with a little bit of luck) become experts and leaders in their fields.

Outcomes are feedback We can’t just “absorb” experiences and expect to learn. As novelist and philosopher Aldous Huxley recognized, “Experience is not what happens to a man; it is what a man does with what happens to him.” There is a big difference between getting experience and becoming an expert. That difference lies in the ability to identify when the outcomes of our decisions have something to teach us and what that lesson might be.

We have the opportunity to learn from the way the future unfolds to improve our beliefs and decisions going forward. The more evidence we get from experience, the less uncertainty we have about our beliefs and choices. Actively using outcomes to examine our beliefs and bets closes the feedback loop, reducing uncertainty. This is the heavy lifting of how we learn.

When the future coughs on us, it is hard to tell why.

To reach our long-term goals, we have to improve at sorting out when the unfolding future has something to teach us, when to close the feedback loop.

The way our lives turn out is the result of two things: the influence of skill and the influence of luck.

Outcomes don’t tell us what’s our fault and what isn’t, what we should take credit for and what we shouldn’t. Unlike in chess, we can’t simply work backward from the quality of the outcome to determine the quality of our beliefs or decisions. This makes learning from outcomes a pretty haphazard process. A negative outcome could be a signal to go in and examine our decision-making. That outcome could also be due to bad luck, unrelated to our decision, in which case treating that outcome as a signal to change future decisions would be a mistake. A good outcome could signal that we made a good decision. It could also mean that we got lucky, in which case we would be making a mistake to use that outcome as a signal to repeat that decision in the future.

When we field our outcomes as the future unfolds, we always run into this problem: the way things turn out could be the result of our decisions, luck, or some combination of the two. Just as we are almost never 100% wrong or right, outcomes are almost never 100% due to luck or skill.

The way we field outcomes is predictably patterned: we take credit for the good stuff and blame the bad stuff on luck so it won’t be our fault. The result is that we don’t learn from experience well.

Off-loading the losses to luck and onboarding the wins to skill meant he persisted in overestimating the likelihood of winning with seven-deuce. He kept betting on a losing future.

Taking credit for the good stuff means we will often reinforce decisions that shouldn’t be reinforced and miss opportunities to see where we could have done better. To be sure, some of the bad stuff that happens is mainly due to luck. And some of the good stuff that happens is mainly due to skill. I just know that’s not true all the time. 100% of our bad outcomes aren’t because we got unlucky and 100% of our good outcomes aren’t because we are so awesome. Yet that is how we process the future as it unfolds.

we take credit for good things and deflect blame for bad things.

Self-serving bias is a deeply embedded and robust thinking pattern. Understanding why this pattern emerges is the first step to developing practical strategies to improve our ability to learn from experience. These strategies encourage us to be more rational in the way we field outcomes, fostering open-mindedness in considering all the possible causes of an outcome, not just the ones that flatter us.

Just as with motivated reasoning, self-serving bias arises from our drive to create a positive self-narrative. In that narrative, taking credit for something good is the same as saying we made the right decision. And being right feels good. Likewise, thinking that something bad was our fault means we made a wrong decision, and being wrong feels bad. When our self-image is at stake, we treat our fielding decisions as 100% or 0%: right versus wrong, skill versus luck, our responsibility versus outside our control. There are no shades of grey.

Unfortunately, learning from watching others is just as fraught with bias. Just as there is a pattern in the way we field our own outcomes, we field the outcomes of our peers predictably. We use the same black-and-white thinking as with our own outcomes, but now we flip the script. Where we blame our own bad outcomes on bad luck, when it comes to our peers, bad outcomes are clearly their fault. While our own good outcomes are due to our awesome decision-making, when it comes to other people, good outcomes are because they got lucky. As artist and writer Jean Cocteau said, “We must believe in luck. For how else can we explain the success of those we don’t like?”

We see this pattern of blaming others for bad outcomes and failing to give them credit for good ones all over the place. When someone else at work gets a promotion instead of us, do we admit they worked harder than and deserved it more than we did? No, it was because they schmoozed the boss. If someone does better on a test at school, it was because the teacher likes them more. If someone explains the circumstances of a car accident and how it wasn’t their fault, we roll our eyes. We assume the cause was their bad driving.

The systematic errors in the way we field the outcomes of our peers comes at a real cost. It doesn’t just come at the cost of reaching our goals but also at the cost of compassion for others.

We all want to feel good about ourselves in the moment, even if it’s at the expense of our long-term goals. Just as with motivated reasoning and self-serving bias, blaming others for their bad results and failing to give them credit for their good ones is under the influence of ego. Taking credit for a win lifts our personal narrative. So too does knocking down a peer by finding them at fault for a loss. That’s schadenfreude: deriving pleasure from someone else’s misfortune. Schadenfreude is basically the opposite of compassion.

We are really in competition for resources with everyone. Our genes are competitive.

Engaging the world through the lens of competition is deeply embedded in our animal brains. It’s not enough to boost our self-image solely by our own successes. If someone we view as a peer is winning, we feel like we’re losing by comparison. We benchmark ourselves to them.

A lot of the way we feel about ourselves comes from how we think we compare with others. This robust and pervasive habit of mind impedes learning.

For him, the opportunity to learn from his mistakes was much more important than treating that dinner as a self-satisfying celebration. He earned a half-million dollars and won a lengthy poker tournament over world-class competition, but all he wanted to do was discuss with a fellow pro where he might have made better decisions.

Habits operate in a neurological loop consisting of three parts: the cue, the routine, and the reward. A habit could involve eating cookies: the cue might be hunger, the routine going to the pantry and grabbing a cookie, and the reward a sugar high. Or, in poker, the cue might be winning a hand, the routine taking credit for it, the reward a boost to our ego. Charles Duhigg, in The Power of Habit, offers the golden rule of habit change—that the best way to deal with a habit is to respect the habit loop: “To change a habit, you must keep the old cue, and deliver the old reward, but insert a new routine.”

The good news is that we can work to change this habit of mind by substituting what makes us feel good. The golden rule of habit change says we don’t have to give up the reward of a positive update to our narrative, nor should we. Duhigg recognizes that respecting the habit loop means respecting the way our brain is built. Our brain is built to seek positive self-image updates. It is also built to view ourselves in competition with our peers. We can’t install new hardware. Working with the way our brains are built in reshaping habit has a higher chance of success than working against it. Better to change the part that is more plastic: the routine of what gives us the good feeling in our narrative and the features by which we compare ourselves to others. At least as far back as Pavlov, behavioral researchers* have recognized the power of substitution in physiological loops. In his famous experiments, his colleague noticed that dogs salivated when they were about to be fed. Because they associated a particular technician with food, the presence of the technician triggered the dogs’ salivation response. Pavlov discovered the dogs could learn to associate just about any stimulus with food, including his famous bell, triggering the salivary response. We can work to change the bell we ring, substituting what makes us salivate. We can work to get the reward of feeling good about ourselves from being a good credit-giver, a good mistake-admitter, a good finder-of-mistakes-in-good-outcomes, a good learner, and (as a result) a good decision-maker. Instead of feeling bad when we have to admit a mistake, what if the bad feeling came from the thought that we might be missing a learning opportunity just to avoid blame? Or that we might be basking in the credit of a good result instead of, like Phil Ivey, recognizing…

Mia Hamm said, “Many people say I’m the best women’s soccer player in the world. I don’t think so. And because of that, someday I just might be.”

Just as Duhigg recommends respecting the habit loop, we can also respect that we are built for competition, and that our self-narrative doesn’t exist in a vacuum. Keep the reward of feeling like we are doing well compared to our peers, but change the features by which we compare ourselves: be a better credit-giver than your peers, more willing than others to admit mistakes, more willing to explore possible reasons for an outcome with an open mind, even, and especially, if that might cast you in a bad light or shine a good light on someone else. In this way we can feel that we are doing well by comparison because we are doing something unusual and hard that most people don’t do. That makes us feel exceptional.

Some of the reasons we come up with may be easy to discount. And some may not. The key is that in explicitly recognizing that the way we field an outcome is a bet, we consider a greater number of alternative causes more seriously than we otherwise would have. That is truthseeking.

The prospect of a bet makes us examine and refine our beliefs, in this case the belief about whether luck or skill was the main influence in the way things turned out. Betting on what we believe makes us take a closer look by making explicit what is already implicit: we have a great deal at risk in assessing why anything turned out the way it did. That sure sounds like a bet worth taking seriously.

Thinking in bets triggers a more open-minded exploration of alternative hypotheses, of reasons supporting conclusions opposite to the routine of self-serving bias. We are more likely to explore the opposite side of an argument more often and more seriously—and that will move us closer to the truth of the matter.

Once we start actively training ourselves in testing alternative hypotheses and perspective taking, it becomes clear that outcomes are rarely 100% luck or 100% skill. This means that when new information comes in, we have options beyond unquestioned confirmation or reversal. We can modify our beliefs along a spectrum because we know it is a spectrum, not a choice between opposites without middle ground. This makes us more compassionate, both toward ourselves and others. Treating outcome fielding as bets constantly reminds us outcomes are rarely attributable to a single cause and there is almost always uncertainty in figuring out the various causes. Identifying a negative outcome doesn’t have the same personal sting if you turn it into a positive by finding things to learn from it. You don’t have to be on the defensive side of every negative outcome because you can recognize, in addition to things you can improve, things you did well and things outside your control. You realize that not knowing is okay. Certainly, in exchange for losing the fear of taking blame for bad outcomes, you also lose the unadulterated high of claiming good outcomes were 100% skill. That’s a trade you should take. Remember, losing feels about twice as bad as winning feels good; being wrong feels about twice as bad as being right feels good. We are in a better place when we don’t have to live at the edges. Euphoria or misery, with no choices in between, is not a very self-compassionate way to live. You also become more compassionate toward other people when you treat fielding outcomes as bets. When you look at the outcomes of others from their perspective, you have to ask yourself, “What if that had happened to me?” You come up with more compassionate assessments of other people where bad things aren’t always their fault and good things aren’t always luck. You are more likely to walk in their shoes. Imagine how Bartman’s life would have changed if more people worked to think this way.

  • importante

reshaping a habit requires time, preparation, practice, and repetition.

Despite the difficulties, striving for accuracy through probabilistic thinking is a worthwhile routine to pursue.

To be sure, thinking in bets is not a miracle cure. Thinking in bets won’t make self-serving bias disappear or motivated reasoning vanish into thin air. But it will make those things better. And a little bit better is all we need to transform our lives. If we field just a few extra outcomes more accurately, if we catch just a few extra learning opportunities, it will make a huge difference in what we learn, when we learn, and how much we learn.

The benefits of recognizing just a few extra learning opportunities compound over time. The cumulative effect of being a little better at decision-making, like compounding interest, can have huge effects in the long run on everything that we do. When we catch that extra occasional learning opportunity, it puts us in a better position for future opportunities of the same type. Any improvement in our decision quality puts us in a better position in the future.

Thinking in bets corrects your course. And even a small correction will get you more safely to your destination.

Recruiting help is key to creating faster and more robust change, strengthening and training our new truthseeking routines.

“You take the blue pill, the story ends. You wake up in your bed and believe whatever you want to believe. You take the red pill, you stay in Wonderland and I show you how deep the rabbit hole goes.” As Neo reaches toward a pill, Morpheus reminds him, “Remember, all I am offering is the truth. Nothing more.” Neo chooses to see the world as it really is. He takes the red pill and is pounded with a series of devastating truths. His comfortable world is a dream created by machines to enslave him as an energy source. His job and lifestyle, his clothes, his appearance, and the entire fabric of his life are an illusion implanted in his brain. In the actual world, taking the red pill causes his body to be unplugged from his feeding pod, flushed into a sewer, and picked up by Morpheus’s pirate ship, the Nebuchadnezzar. As rebels against the machines, Morpheus and his crew (and now Neo, due to his choice) live in cramped quarters, sleep in uncomfortable cells, eat gruel, and wear rags. Machines are out to destroy them. The trade-off is that Neo sees the world as it actually is and, in the end, gets to defeat the machines that have enslaved humanity.

Giving that up is not the easiest choice. Living in the matrix is comfortable. So is the natural way we process information to protect our self-image in the moment. By choosing to exit the matrix, we are asserting that striving for a more objective representation of the world, even if it is uncomfortable at times, will make us happier and more successful in the long run. But it’s a trade-off that isn’t for everyone; it must be freely chosen to be productive and sustainable. Morpheus (unlike Letterman) didn’t just go around ripping people out of the matrix against their will. He asked Neo to make the choice and exit the matrix with him.

I learned from this experience that thinking in bets was easier if I had other people to help me. (Even Neo needed help to defeat the machines.) Remember the buddy system from school field trips or camp? Teachers or counselors would pair everybody up with a buddy. Our buddy was supposed to keep us from wandering off or getting into water too deep, and we did the same for our buddy. A good decision group is a grown-up version of the buddy system. To be sure, even with help, none of us will ever be able to perfectly overcome our natural biases in the way we process information; I certainly never have. But if we can find a few people to choose to form a truthseeking pod with us and help us do the hard work connected with it, it will move the needle—just a little bit, but with improvements that accumulate and compound over time. We will be more successful in fighting bias, seeing the world more objectively, and, as a result, we will make better decisions. Doing it on our own is just harder. Members of our decision pod could be our friends, or members of our family, or an informal pod of coworkers, or an enterprise strategy group, or a professional organization where members can talk about their decision-making. Forming or joining a group where the focus is on thinking in bets means modifying the usual social contract. It means agreeing to be open-minded to those who disagree with us, giving credit where it’s due, and taking responsibility where it’s appropriate, even (and especially) when it makes us uncomfortable. That’s why, when we do it with others, we need to make it clear the social contract is being modified, or feelings will get hurt, defensiveness will rear its ugly head, and, just like Lauren Conrad, your audience won’t want to hear what you have to say. So, while we find some people to think in bets with us, with the rest of the world, it is generally better to observe the prevailing social contract and not go around saying, “Wanna bet?” willy-nilly. (That doesn’t mean we can’t ever engage in truthseeking outside of our group. Our approach just needs to be less head-on, less Letterman-like.

Having the help of others provides many decision-making benefits, but one of the most obvious is that other people can spot our errors better than we can. We can help others in our pod overcome their blind-spot bias and they can help us overcome the same.

as long as there are three people in the group (two to disagree and one to referee*), the truthseeking group can be stable and productive.

we can do better with the help of others.

“Complex and open-minded thought is most likely to be activated when decision makers learn prior to forming any opinions that they will be accountable to an audience (a) whose views are unknown, (b) who is interested in accuracy, (c) who is reasonably well-informed, and (d) who has a legitimate reason for inquiring into the reasons behind participants’ judgments/choices.”

groups can improve the thinking of individual decision-makers when the individuals are accountable to a group whose interest is in accuracy.

“If you put individuals together in the right way, such that some individuals can use their reasoning powers to disconfirm the claims of others, and all individuals feel some common bond or shared fate that allows them to interact civilly, you can create a group that ends up producing good reasoning as an emergent property of the social system. This is why it’s so important to have intellectual and ideological diversity within any group or institution whose goal is to find truth.”

the advice of these experts in group interaction adds up to a pretty good blueprint for a truthseeking charter: A focus on accuracy (over confirmation), which includes rewarding truthseeking, objectivity, and open-mindedness within the group; Accountability, for which members have advance notice; and Openness to a diversity of ideas. An agreement along these lines creates a common bond and shared fate among members, allowing the group to produce sound reasoning.

We don’t win bets by being in love with our own ideas. We win bets by relentlessly striving to calibrate our beliefs and predictions about the future to more accurately represent the world. In the long run, the more objective person will win against the more biased person. In that way, betting is a form of accountability to accuracy. Calibration requires an open-minded consideration of diverse points of view and alternative hypotheses. Wrapping all that into your group’s charter makes a lot of sense. The charter of the group must be communicated unambiguously,

Even better, interacting with similarly motivated people improves the ability to combat bias not just during direct interactions but when we are making and analyzing decisions on our own. The group gets into our head—in a good way—reshaping our decision habits.

It’s great to get approval from people we respect, but we crave approval so badly, we’ll still work to get it from a stranger. A productive decision group can harness this desire by rewarding accuracy and intellectual honesty with social approval.

It is one thing to commit to rewarding ourselves for thinking in bets, but it is a lot easier if we get others to do the work of rewarding us.

I experienced firsthand the power of a group’s approval to reshape individual thinking habits. I got my fix by trying to be the best credit-giver, the best mistake-admitter, and the best finder-of-mistakes-in-good-outcomes. The reward was their enthusiastic engagement and deep dives introducing me to the nuances of poker strategy. It was also rewarding to have these intelligent, successful players take my questions seriously and increasingly ask for my opinions. In contrast, I felt disapproval from them when I acted against the charter and complained about my bad luck, or expected them to confirm how great I played simply because I was winning.

Once we are in a group that regularly reinforces exploratory thought, the routine becomes reflexive, running on its own. Exploratory thought becomes a new habit of mind, the new routine, and one that is self-reinforced. In a Pavlovian way, after enough approval from the group for doing the hard work of thinking in bets, we get the same good feeling from focusing on accuracy on our own. We internalize the group’s approval, and, as a matter of habit, we begin to do the kind of things that would earn it when we are away from the group (which is, after all, most of the time).

Accountability is a willingness or obligation to answer for our actions or beliefs to others. A bet is a form of accountability. If we’re in love with our own opinions, it can cost us in a bet.

Accountability, like reinforcement of accuracy, also improves our decision-making and information processing when we are away from the group because we know in advance that we will have to answer to the group for our decisions.

it also reminded me I’d have to answer for the decision to a group of players I respected.

Imagining how the discussion will go helps us to spot more errors on our own and catch them more quickly.

On our own, we have just one viewpoint. That’s our limitation as humans. But if we take a bunch of people with that limitation and put them together in a group, we get exposed to diverse opinions, can test alternative hypotheses, and move toward accuracy.

Why might my belief not be true? What other evidence might be out there bearing on my belief? Are there similar areas I can look toward to gauge whether similar beliefs to mine are true? What sources of information could I have missed or minimized on the way to reaching my belief? What are the reasons someone else could have a different belief, what’s their support, and why might they be right instead of me? What other perspectives are there as to why things turned out the way they did?

We only get exposed to the information we have been exposed to, only live the experiences we have experienced, only think of the hypotheses that we can conceive of. It’s hard to know what reasons someone else could have for believing something different. We aren’t them. We haven’t had their experiences. We don’t know what different information they have. But they do.

A diverse group can do some of the heavy lifting of de-biasing for us.

Dissent channels and red teams are a beautiful implementation of Mill’s bedrock principle that we can’t know the truth of a matter without hearing the other side. This commitment to diversity of opinion is something that we would be wise to apply to our own decision groups.

Diversity is the foundation of productive group decision-making, but we can’t underestimate how hard it is to maintain. We all tend to gravitate toward people who are near clones of us.

“What is necessary is reasonable diversity, or diversity of reasonable views … and that it is important to ensure that judges, no less than anyone else, are exposed to it, and not merely through the arguments of advocates.”

We often don’t even realize when we are in the echo chamber ourselves, because we’re so in love with our own ideas that it all just sounds sensible and right.

groups with diverse viewpoints are the best protection against confirmatory thought.

the opinions of group members aren’t much help if it is a group of clones.

“[n]obody has found a way to eradicate confirmation bias in individuals, but we can diversify the field to the point to where individual viewpoint biases begin to cancel out each other.”

A lot of people were surprised to learn that the expert opinion expressed as a bet was more accurate than expert opinion expressed through peer review, since peer review is considered a rock-solid foundation of the scientific method.

A growing number of businesses are, in fact, implementing betting markets to solve for the difficulties in getting and encouraging contrary opinions. Companies implementing prediction markets to test decisions include Google, Microsoft, General Electric, Eli Lilly, Pfizer, and Siemens. People are more willing to offer their opinion when the goal is to win a bet rather than get along with people in a room.

Per the BBS paper, CUDOS stands for Communism (data belong to the group), Universalism (apply uniform standards to claims and evidence, regardless of where they came from), Disinterestedness (vigilance against potential conflicts that can influence the group’s evaluation), and Organized Skepticism (discussion among the group to encourage engagement and dissent).

if you’re doing an experiment, you should report everything that you think might make it invalid—not only what you think is right about it: other causes that could possibly explain your results …”

The mere fact of our hesitation and discomfort is a signal that such information may be critical to providing a complete and balanced account. Likewise, as members of a group evaluating a decision, we should take such hesitation as a signal to explore further.

Sharing data and information, like the other elements of a truthseeking charter, is done by agreement. Academics agree to share results. The government shares information by agreement with the people. Without an agreement, we can’t and shouldn’t compel others to share information they don’t want to share. We all have a right of privacy. Companies and other entities have rights to trade secrets and to protect their intellectual property. But within our group, an agreement to share details pertinent to assessing the quality of a decision is part of a productive truthseeking charter. If the group is discussing a decision and it doesn’t have all the details, it might be because the person providing them doesn’t realize the relevance of some of the data. Or it could mean the person telling the story has a bias toward encouraging a certain narrative that they likely aren’t even aware of.

Even without conflicting versions, the Rashomon Effect reminds us that we can’t assume one version of a story is accurate or complete. We can’t count on someone else to provide the other side of the story, or any individual’s version to provide a full and objective accounting of all the relevant information. That’s why, within a decision group, it is helpful to commit to this Mertonian norm on both sides of the discussion. When presenting a decision for discussion, we should be mindful of details we might be omitting and be extra-safe by adding anything that could possibly be relevant. On the evaluation side, we must query each other to extract those details when necessary.

Be a data sharer. That’s what experts do. In fact, that’s one of the reasons experts become experts. They understand that sharing data is the best way to move toward accuracy because it extracts insight from your listeners of the highest fidelity.

What the experts recognize is that the more detail you provide, the better the assessment of decision quality you get. And because the same types of details are always expected, expert players essentially work from a template, so there is less opportunity to convey only the information that might lead the listener down a garden path to a desired conclusion.

We are naturally reluctant to share information that could encourage others to find fault in our decision-making. My group made this easier by making me feel good about committing myself to improvement. When I shared details that cast me in what I perceived to be a bad light, I got a positive self-image update from the approval of players I respected. In my consulting, I’ve encouraged companies to make sure they don’t define “winning” solely by results or providing a self-enhancing narrative. If part of corporate success consists of providing the most accurate, objective, and detailed evaluation of what’s going on, employees will compete to win on those terms. That will reward better habits of mind. Agree to be a data sharer and reward others in your decision group for telling more of the story.

if you don’t like the message, you shouldn’t take it out on the messenger.

don’t disparage or ignore an idea just because you don’t like who or where it came from.

Whether the situation involves facts, ideas, beliefs, opinions, or predictions, the substance of the information has merit (or lack of merit) separate from where it came from.

The accuracy of the statement should be evaluated independent of its source.

Nearly any group can create an exercise to develop and reinforce the open-mindedness universalism requires.

So leave the source out to start, giving the group the maximum opportunity to form an impression without shooting (or celebrating) the message based on their opinion of the messenger (separate from the expertise and credibility of the messenger).

We tend to think about conflicts of interest in the financial sense, like the researchers getting paid by the sugar industry. But conflicts of interest come in many flavors. Our brains have built-in conflicts of interest, interpreting the world around us to confirm our beliefs, to avoid having to admit ignorance or error, to take credit for good results following our decisions, to find reasons bad results following our decisions were due to factors outside our control, to compare well with our peers, and to live in a world where the way things turn out makes sense. We are not naturally disinterested. We don’t process information independent of the way we wish the world to be.

Knowing how something turned out creates a conflict of interest that expresses itself as resulting.

Telling someone how a story ends encourages them to be resulters, to interpret the details to fit that outcome. If I won a hand, it was more likely my group would assess my strategy as good. If I lost, the reverse would be true. Win a case at trial, the strategy is brilliant. Lose, and mistakes were made. We treat outcomes as good signals for decision quality, as if we were playing chess. If the outcome is known, it will bias the assessment of the decision quality to align with the outcome quality. If the group is blind to the outcome, it produces higher fidelity evaluation of decision quality. The best way to do this is to deconstruct decisions before an outcome is known.

In poker, it isn’t practical to analyze hands before knowing how they turn out since the results come within seconds of the decisions. To address this, many expert poker players often omit the outcome when seeking advice about their play.

Anyone can provide the narrative only up to the point of the decision under consideration, leaving off the outcome so as not to infect their listeners with bias. And outcomes aren’t the only problem. Beliefs are also contagious. If our listeners know what we believe to be true, they will likely work pretty hard to justify our beliefs, often without even knowing they are doing it. They will develop an ideological conflict of interest created by our informing our listeners of our beliefs. So when trying to vet some piece of information, some fact or opinion, we would do well to shield our listeners from what our opinion is as we seek the group’s opinion. Simply put, the group is less likely to succumb to ideological conflicts of interest when they don’t know what the interest is.

Another way a group can de-bias members is to reward them for skill in debating opposing points of view and finding merit in opposing positions. When members of the group disagree, a debate may be of only marginal value because the people debating are biased toward confirming their position, often creating stalemate. If two people disagree, a referee can get them to each argue the other’s position with the goal of being the best debater. This acts to shift the interest to open-mindedness to the opposing opinion rather than confirmation of their original position.

Skepticism is about approaching the world by asking why things might not be true rather than why they are true. It’s a recognition that, while there is an objective truth, everything we believe about the world is not true.

If we don’t “lean over backwards” (as Richard Feynman famously said) to figure out where we could be wrong, we are going to make some pretty bad bets.

Expression of disagreement is, after all, just another way to express our own beliefs, which we acknowledge are probabilistic in nature. Therefore, overtly expressing the uncertainty in a dissenting belief follows. No longer do we dissent with declarations of “You’re wrong!” Rather, we engage by saying, “I’m not sure about that.” Or even just ask, “Are you sure about that?” or “Have you considered this other way of thinking about it?” We engage this way simply because that is faithful to uncertainty. Organized skepticism invites people into a cooperative exploration. People are more open to hearing differing perspectives expressed this way.

Likewise, companies can implement an anonymous dissent channel, giving any employee, from the mail room to the boardroom, a venue to express dissenting opinions, alternative strategies, novel ideas, and points of view that may disagree with the prevailing viewpoint of the company without fear of repercussions. The company should do its best to reward this constructive dissent by taking the suggestions seriously or the expression of diverse viewpoints won’t be reinforced.

Fear of being wrong (or of having to suggest someone else is wrong) countervails the social contract of confirmation, often causing people to withhold valuable insights and opinions from us. If we start by making clear our own uncertainty, our audience is more likely to understand that any discussion that follows will not involve right versus wrong, maximizing our truthseeking exchanges with those outside our chartered group.

If someone expresses a belief or prediction that doesn’t sound well calibrated and we have relevant information, try to say and, as in, “I agree with you that [insert specific concepts and ideas we agree with], AND …” After “and,” add the additional information. In the same exchange, if we said, “I agree with you that [insert specific concepts and ideas you agree with], BUT … ,” that challenge puts people on the defensive. “And” is an offer to contribute. “But” is a denial and repudiation of what came before.

In the performance art of improvisation, the first advice is that when someone starts a scene, you should respond with “yes, and …” “Yes” means you are accepting the construct of the situation. “And” means you are adding to it. That’s an excellent guideline in any situation in which you want to encourage exploratory thought. The important thing is to try to find areas of agreement to maintain the spirit of partnership in seeking the truth. In expressing potentially contradictory or dissenting information, our language ideally minimizes the element of disagreement.

we are generally pretty good at identifying the positive goals we are striving for; our problem is in the execution of the decisions along the way to reaching those goals. People dislike engaging with their poor execution. That requires taking responsibility for what is often a bad outcome, which, as David Letterman found out, will shut down the conversation. Rather than rehashing what has already happened, try instead to engage about what the person might do so that things will turn out better going forward. Whether it’s our kids, other family members, friends, relationship partners, coworkers, or even ourselves, we share the common trait of generally being more rational about the future than the past. It’s harder to get defensive about something that hasn’t happened yet.

When we validate the other person’s experience of the past and refocus on exploration of the future, they can get to their past decisions on their own.

Ultimately, even with our own kids’ decisions, rehashing outcomes can create defensiveness. The future, on the other hand, can always be better if we can get them to focus on things in their control. These methods of communicating with people outside our truthseeking group focus on future goals and future actions. When it works, they take a short trip into the future, beyond the frustrations of the present and toward ways to improve things they can control.

Just as we can recruit other people to be our decision buddies, we can recruit other versions of ourselves to act as our own decision buddies. We can harness the power of mental time traveling, operationalizing it, encouraging it, and figuring out ways to cause that collision of past, present, and future as much as possible. Present-us needs that help, and past-us and future-us can be the best decision buddies for the job.*

The best poker players develop practical ways to incorporate their long-term strategic goals into their in-the-moment decisions.

addition, we can make the best possible decisions and still not get the result we want. Improving decision quality is about increasing our chances of good outcomes, not guaranteeing them. Even when that effort makes a small difference—more rational thinking and fewer emotional decisions, translated into an increased probability of better outcomes—it can have a significant impact on how our lives turn out. Good results compound. Good processes become habits, and make possible future calibration and improvement.

When we make in-the-moment decisions (and don’t ponder the past or future), we are more likely to be irrational and impulsive.* This tendency we all have to favor our present-self at the expense of our future-self is called temporal discounting.* We are willing to take an irrationally large discount to get a reward now instead of waiting for a bigger reward later.

Time traveling can get us in touch with that future version of us. It can get future-us to remind present-us, “Hey, don’t discount!” Or at least, “Don’t discount so much!”

When we imagine the future, we don’t just make it up out of whole cloth, inventing a future based on nothing that we have ever seen or experienced. Our vision of the future, rather, is rooted in our memories of the past. The future we imagine is a novel reassembling of our past experiences. Given that, it shouldn’t be surprising that the same neural network is engaged when we imagine the future as when we remember the past. Thinking about the future is remembering the future, putting memories together in a creative way to imagine a possible way things might turn out.

Bringing our future-self into the decision gets us started thinking about the future consequences of those in-the-moment decisions. Fundamentally, Morning Jerry and Night Jerry are living the same life, and getting Morning Jerry into Night Jerry’s face will remind him of that.

Philosophers agree that regret is one of the most intense emotions we feel, but they have argued about whether it is productive or useful. Nietzsche said that remorse was “adding to the first act of stupidity a second.” Thoreau, on the other hand, praised the power of regret: “Make the most of your regrets; never smother your sorrow, but tend and cherish it till it comes to have a separate and integral interest. To regret deeply is to live afresh.” The problem isn’t so much whether regret is an unproductive emotion. It’s that regret occurs after the fact, instead of before. As Nietzsche points out, regret can do nothing to change what has already happened. We just wallow in remorse about something over which we no longer have any control. But if regret occurred before a decision instead of after, the experience of regret might get us to change a choice likely to result in a bad outcome. Then we could embrace Thoreau’s view and harness the power of regret because it would serve a valuable purpose. It would be helpful, then, if we could get regret to do some time traveling of its own, moving before our decisions instead of after them. That way, regret might be able to keep us from making a bad bet. In addition, it wouldn’t, as Nietzsche implied, rear its head later by causing us to make a remorse-fueled second mistake.

“Every 10-10-10 process starts with a question… . [W]hat are the consequences of each of my options in ten minutes? In ten months? In ten years?” This set of questions triggers mental time travel that cues that accountability conversation (also encouraged by a truthseeking decision group). We can build on Welch’s tool by asking the questions through the frame of the past: “How would I feel today if I had made this decision ten minutes ago? Ten months ago? Ten years ago?” Whichever frame we choose, we draw on our past experiences (including similar decisions we may have regretted) in answering the questions, recruiting into the decision those less-reactive brain pathways that control executive functioning.

Moving regret in front of a decision has numerous benefits. First, obviously, it can influence us to make a better decision. Second, it helps us treat ourselves (regardless of the actual decision) more compassionately after the fact. We can anticipate and prepare for negative outcomes. By planning ahead, we can devise a plan to respond to a negative outcome instead of just reacting to it. We can also familiarize ourselves with the likelihood of a negative outcome and how it will feel. Coming to peace with a bad outcome in advance will feel better than refusing to acknowledge it, facing it only after it has happened.

Our problem is that we’re ticker watchers of our own lives. Happiness (however we individually define it) is not best measured by looking at the ticker, zooming in and magnifying moment-by-moment or day-by-day movements. We would be better off thinking about our happiness as a long-term stock holding. We would do well to view our happiness through a wide-angle lens, striving for a long, sustaining upward trend in our happiness stock, so it resembles the first Berkshire Hathaway chart. Mental time travel makes that kind of perspective possible. We can use our past- and future-selves to pull us out of the moment and remind us when we’re watching the ticker, looking at our lives through that lens on extreme zoom.

The decisions driven by the emotions of the moment can become a self-fulfilling prophecy, degrading the quality of the bets we make, increasing the chances of bad outcomes, and making things worse.

If we got a big promotion last week and have a flat tire right now, we are cursing our lives, complaining about how unlucky we are. Our feelings are not a reaction to the average of how things are going. We feel sad if we are breaking even (or winning) on an investment that used to be valued much higher. In relationships, even small disagreements seem big in the midst of the disagreement. The problem in all these situations (and countless others) is that our in-the-moment emotions affect the quality of the decisions we make in those moments, and we are very willing to make decisions when we are not emotionally fit to do so.

Once we pull ourselves out of the moment through time-traveling exercises, we can see these things in proportion to their size, free of the distortion caused by whether the ticker just moved up or down.

Surfers have more than twenty terms to describe different kinds of waves. The reason is that the type of wave, the way it breaks, the direction it’s coming from, the bottom depth, etc., create differing challenges for surfers. There are closeouts (waves that break all at once) and double-ups (a type of wave created when two waves meet to form one wave) and reforms (a wave that will break, then die down, then break again). Non-surfers just call all of these “waves.” On rare occasions when we non-surfers need to be more specific, we just add a lot of extra words. Those extra words don’t cost us much because it doesn’t come up very often—maybe never. But for people involved in specialized activities, it’s worth it to be able to communicate a complex concept in a single word that laypeople would need lengthy phrases to convey. Having a nuanced, precise vocabulary is what jargon is all about. It’s why carpenters have at least a dozen names for different kinds of nails, and in the field of neuro-oncology, there are more than 120 types of brain and central nervous system tumors.

Any kind of outcome has the potential for causing an emotional reaction.

When we take the long view, we’re going to think in a more rational way.

This action—past-us preventing present-us from doing something stupid—has become known as a Ulysses contract.

It’s the perfect interaction between past-you, present-you, and future-you. Ulysses recognized that his future-self (along with his crew) would become entranced by the Sirens and steer toward the rocks. So he had his crew fill their ears with wax and tie his hands to the mast, literally binding his future-self to better behavior. One of the simplest examples of this kind of contract is using a ride-sharing service when you go to a bar. A past version of you, who anticipated that you might decide irrationally about whether you are okay to drive, has bound your hands by taking the car keys out of them.

Ulysses contracts can come in varying levels of how much your hands are bound, ranging from physically preventing acting on a decision to just committing in advance to certain actions without any barriers save the commitment itself. Regardless of the level of binding, precommitment contracts trigger a decision-interrupt. At the moment when we consider breaking the contract, when we want to cut the binding, we are much more likely to stop and think. When you are physically prohibited from deciding, you are interrupted in the sense that you are prevented from acting on an irrational impulse; the option simply isn’t there. That’s the brute-force way to do this kind of time traveling. Past-Ulysses interrupted present-Ulysses’s decision by taking the decision, literally, out of his hands.

Ulysses contracts can help us in several ways to be more rational investors. When we set up an automatic allocation from our pay into a retirement account, that’s a Ulysses contract. We could go through the trouble of changing the allocation, but setting it up initially gives our goal-setting, System 2–self a chance to precommit to what we know is best for our long-term future. And if we want to change the allocation, we have to take some specific steps to do so, creating a decision-interrupt.

here is a sample of the kinds of things that might trigger a decision-interrupt. Signs of the illusion of certainty: “I know,” “I’m sure,” “I knew it,” “It always happens this way,” “I’m certain of it,” “you’re 100% wrong,” “You have no idea what you’re talking about,” “There’s no way that’s true,” “0%” or “100%” or their equivalents, and other terms signaling that we’re presuming things are more certain than we know they are. This also includes stating things as absolutes, like “best” or “worst” and “always” or “never.” Overconfidence: similar terms to the illusion of certainty. Irrational outcome fielding: “I can’t believe how unlucky I got,” or the reverse, if we have some default phrase for credit taking, like “I’m at the absolute top of my game” or “I planned it perfectly.” This includes conclusions of luck, skill, blame, or credit. It includes equivalent terms for irrationally fielding the outcomes of others, like, “They totally had that coming,” “They brought it on themselves,” and “Why do they always get so lucky?” Any kind of moaning or complaining about bad luck just to off-load it, with no real point to the story other than to get sympathy. (An exception would be when we’re in a truthseeking group and we make explicit that we’re taking a momentary break to vent.) Generalized characterizations of people meant to dismiss their ideas: insulting, pejorative characterizations of others, like “idiot” or, in poker, “donkey.” Or any phrase that starts by characterizing someone as “another typical ________.” (Like David Letterman said to Lauren Conrad, he dismissed everyone around him as an idiot, until he pulled himself into deliberative mind one day and asked, “What are the odds that everyone is an idiot?”) Other violations of the Mertonian norm of universalism, shooting the message because we don’t think much of the messenger. Any sweeping term about someone, particularly when we equate our assessment of an idea with a sweeping personality or intellectual assessment of the person delivering the idea, such as “gun nut,” “bleeding heart,” “East Coast,” “Bible belter,” “California values”—political or social issues. Also be on guard for the reverse: accepting a message because of the messenger or praising a source immediately after finding out it confirms your thinking. Signals that we have zoomed in on a moment, out of proportion with the scope of time: “worst day ever,” “the day from hell.” Expressions that explicitly signal motivated reasoning, accepting or rejecting information without much evidence, like “conventional wisdom” or “if you ask anybody” or “Can you prove that it’s not true?” Similarly, look for expressions that you’re participating in an echo chamber, like “everyone agrees with me.” The word “wrong,” which deserves its own swear jar. The Mertonian norm of organized skepticism allows little place in exploratory discussion for the word “wrong.” “Wrong” is a conclusion, not a rationale. And it’s not a particularly accurate…

For us to make better decisions, we need to perform reconnaissance on the future. If a decision is a bet on a particular future based on our beliefs, then before we place a bet we should consider in detail what those possible futures might look like. Any decision can result in a set of possible outcomes.

Figure out the possibilities, then take a stab at the probabilities. To start, we imagine the range of potential futures. This is also known as scenario planning.

After identifying as many of the possible outcomes as we can, we want to make our best guess at the probability of each of those futures occurring.

The reason why we do reconnaissance is because we are uncertain. We don’t (and likely can’t) know how often things will turn out a certain way with exact precision. It’s not about approaching our future predictions from a point of perfection. It’s about acknowledging that we’re already making a prediction about the future every time we make a decision, so we’re better off if we make that explicit. If we’re worried about guessing, we’re already guessing. We are already guessing that the decision we execute will result in the highest likelihood of a good outcome given the options we have available to us. By at least trying to assign probabilities, we will naturally move away from the default of 0% or 100%, away from being sure it will turn out one way and not another. Anything that moves us off those extremes is going to be a more reasonable assessment than not trying at all. Even if our assessment results in a wide range, like the chances of a particular scenario occurring being between 20% and 80%, that is still better than not guessing at all.

“What are the possible futures? What are the probabilities of those possible futures?” And they get very comfortable with the fact that they don’t know exactly because they can’t see their opponent’s cards. This is true of most strategic thinking. Whether it involves sales strategies, business strategies, or courtroom strategies, the best strategists are considering a fuller range of possible scenarios, anticipating and considering the strategic responses to each, and so on deep into the decision tree.

First, scenario planning reminds us that the future is inherently uncertain. By making that explicit in our decision-making process, we have a more realistic view of the world. Second, we are better prepared for how we are going to respond to different outcomes that might result from our initial decision. We can anticipate positive or negative developments and plan our strategy, rather than being reactive. Being able to respond to the changing future is a good thing; being surprised by the changing future is not. Scenario planning makes us nimbler because we’ve considered and are prepared for a wider variety of possible futures. And if our reconnaissance has identified situations where we are susceptible to irrationality, we can try to bind our hands with a Ulysses contract. Third, anticipating the range of outcomes also keeps us from unproductive regret (or undeserved euphoria) when a particular future happens. Finally, by mapping out the potential futures and probabilities, we are less likely to fall prey to resulting or hindsight bias, in which we gloss over the futures that did not occur and behave as if the one that did occur must have been inevitable, because we have memorialized all the possible futures that could have happened.

The important thing is that we do better when we scout all these futures and make decisions based on the probabilities and desirability of the different futures.

Reconnaissance of the future dramatically improves decision quality and reduces reactivity to outcomes. So far, we have talked about thinking ahead to what the future might look like. But it turns out that better decision trees, more effective scenario planning, results from working backward rather than forward.

When it comes to advance thinking, standing at the end and looking backward is much more effective than looking forward from the beginning.

When we forecast the future, we run the risk of a similar distortion. From where we stand, the present and the immediate future loom large. Anything beyond that loses focus. Imagining the future recruits the same brain pathways as remembering the past. And it turns out that remembering the future is a better way to plan for it. From the vantage point of the present, it’s hard to see past the next step. We end up over-planning for addressing problems we have right now. Implicit in that approach is the assumption that conditions will remain the same, facts won’t change, and the paradigm will remain stable. The world changes too fast to assume that approach is generally valid.

Just as great poker players and chess players (and experts in any field) excel by planning further into the future than others, our decision-making improves when we can more vividly imagine the future, free of the distortions of the present. By working backward from the goal, we plan our decision tree in more depth, because we start at the end.

They “found that prospective hindsight—imagining that an event has already occurred—increases the ability to correctly identify reasons for future outcomes by 30%.”

The most common form of working backward from our goal to map out the future is known as backcasting. In backcasting, we imagine we’ve already achieved a positive outcome, holding up a newspaper with the headline “We Achieved Our Goal!” Then we think about how we got there. Let’s say an enterprise wants to develop a three-year strategic plan to double market share, from 5% to 10%. Each person engaged in the planning imagines holding up a newspaper whose headline reads “Company X Has Doubled Its Market Share over the Past Three Years.” The team leader now asks them to identify the reasons they got there, what events occurred, what decisions were made, what went their way to get the enterprise to capture that market share. This enables the company to better identify strategies, tactics, and actions that need to be implemented to get to the goal. It also allows it to identify when the goal needs to be tweaked. Backcasting makes it possible to identify when there are low-probability events that must occur to reach the goal. That could lead to developing strategies to increase the chances those events occur or to recognizing the goal is too ambitious. The company can also make precommitments to a plan developed through backcasting, including responses to developments that can interfere with reaching the goal and identifying inflection points for re-evaluating the plan as the future unfolds.

Working backward helps even more when we give ourselves the freedom to imagine an unfavorable future.

premortem is an investigation into something awful, but before it happens.

A premortem is where we check our positive attitude at the door and imagine not achieving our goals. Backcasting and premortems complement each other. Backcasting imagines a positive future; a premortem imagines a negative future. We can’t create a complete picture without representing both the positive space and the negative space. Backcasting reveals the positive space. Premortems reveal the negative space. Backcasting is the cheerleader; a premortem is the heckler in the audience. Imagining a headline that reads “We Failed to Reach Our Goal” challenges us to think about ways in which things could go wrong that we otherwise wouldn’t if left to our own (optimistic, team-player) devices.

Oettingen recognized that we need to have positive goals, but we are more likely to execute on those goals if we think about the negative futures. We start a premortem by imagining why we failed to reach our goal:

Then we imagine why. All those reasons why we didn’t achieve our goal help us anticipate potential obstacles and improve our likelihood of succeeding. A premortem is an implementation of the Mertonian norm of organized skepticism, changing the rules of the game to give permission for dissent. Being a team player in a premortem isn’t about being the most enthusiastic cheerleader; it’s about being the most productive heckler.

The premortem starts with working backward from an unfavorable future, or failure to achieve a goal, so competing for favor, or feeling good about contributing to the process, is about coming up with the most creative, relevant, and actionable reasons for why things didn’t work out. The key to a successful premortem is that everyone feels free to look for those reasons, and they are motivated to scour everything—personal experience, company experience, historical precedent, episodes of The Hills, sports analogies, etc.—to come up with ways a decision or plan can go bad, so the team can anticipate and account for them.

Imagining both positive and negative futures helps us build a more realistic vision of the future, allowing us to plan and prepare for a wider variety of challenges, than backcasting alone. Once we recognize the things that can go wrong, we can protect against the bad outcomes, prepare plans of action, enable nimble responses to a wider range of future developments, and assimilate a negative reaction in advance so we aren’t so surprised by it or reactive to it. In doing so, we are more likely to achieve our goals.

Remember, the likelihood of positive and negative futures must add up to 100%. The positive space of backcasting and the negative space of a premortem still have to fit in a finite amount of space. When we see how much negative space there really is, we shrink down the positive space to a size that more accurately reflects reality and less reflects our naturally optimistic nature.

In a way, backcasting without premortems is a form of temporal discounting: if we imagine a positive future, we feel better now, but we’ll more than compensate for giving up that immediate gratification through the benefits of seeing the world more accurately, making better initial decisions, and being nimbler about what the world throws our way.

One of the goals of mental time travel is keeping events in perspective. To understand an overriding risk to that perspective, think about time as a tree. The tree has a trunk, branches at the top, and the place where the trunk meets the branches. The trunk is the past. A tree has only one, growing trunk, just as we have only one, accumulating past. The branches are the potential futures. Thicker branches are the equivalent of more probable futures, thinner branches are less probable ones. The place where the top of the trunk meets the branches is the present. There are many futures, many branches of the tree, but only one past, one trunk. As the future becomes the past, what happens to all those branches? The ever-advancing present acts like a chainsaw. When one of those many branches happens to be the way things turn out, when that branch transitions into the past, present-us cuts off all those other branches that didn’t materialize and obliterates them. When we look into the past and see only the thing that happened, it seems to have been inevitable. Why wouldn’t it seem inevitable from that vantage point? Even the smallest of twigs, the most improbable of futures—like the 2%–3% chance Russell Wilson would throw that interception—expands when it becomes part of the mighty trunk. That 2%–3%, in hindsight, becomes 100%, and all the other branches, no matter how thick they were, disappear from view. That’s hindsight bias, an enemy of probabilistic thinking.

Once something occurs, we no longer think of it as probabilistic—or as ever having been probabilistic. This is how we get into the frame of mind where we say, “I should have known” or “I told you so.” This is where unproductive regret comes from.

To some degree, we’re all outcome junkies, but the more we wean ourselves from that addiction, the happier we’ll be. None of us is guaranteed a favorable outcome, and we’re all going to experience plenty of unfavorable ones. We can always, however, make a good bet. And even when we make a bad bet, we usually get a second chance because we can learn from the experience and make a better bet the next time. Life, like poker, is one long game, and there are going to be a lot of losses, even after making the best possible bets. We are going to do better, and be happier, if we start by recognizing that we’ll never be sure of the future. That changes our task from trying to be right every time, an impossible job, to navigating our way through the uncertainty by calibrating our beliefs to move toward, little by little, a more accurate and objective representation of the world. With strategic foresight and perspective, that’s manageable work. If we keep learning and calibrating, we might even get good at it.

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