TIP715: THINKING IN BETS BY ANNIE DUKE

W/ CLAY FINCK

17 April 2025

In this episode, Clay explores the book Thinking in Bets by Annie Duke, a guide to making better decisions under uncertainty.

Drawing from her career as a professional poker player, Annie shares how to separate decision quality from outcomes and avoid the trap of “resulting.” Clay also discusses how our brains are wired for certainty, why embracing probabilistic thinking leads to better outcomes, and the value of building a truth-seeking support system. Additionally, he uncovers tools like backcasting, premortems, and kill criteria to improve long-term decision-making as investors.

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IN THIS EPISODE, YOU’LL LEARN:

  • What it means to “think in bets” and how poker can sharpen decision-making.
  • The concept of “resulting” and how it distorts our ability to evaluate decisions.
  • Why good decisions can still lead to bad outcomes—and vice versa.
  • How investing parallels poker with incomplete information and uncertainty.
  • The role of System 1 vs. System 2 thinking in making better choices.
  • How to build a feedback loop that separates luck from skill.
  • The dangers of confirmation bias and how beliefs are often formed by default.
  • The importance of building a truth-seeking group or “buddy system.”
  • How backcasting and premortems can help map out future decisions.
  • The power of setting kill criteria to avoid emotional decision-making.
  • And so much more!

TRANSCRIPT

Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

[00:00:00] Clay Finck: Have you ever made a decision that turned out poorly and immediately assumed it was a bad decision, or maybe you got lucky and things turned out well for you and thought you made a brilliant call? In today’s episode, we explore why those snap judgments can be so misleading and lead to poor decision making.

[00:00:18] Clay Finck: We’re diving into Annie Duke’s powerful book, Thinking In Bets, where she shares practical ways we can make better decisions and overcome a host of behavioral biases. Most decisions are made under uncertainty with incomplete information, and luck plays a big role in the outcome, but judging your decisions based solely on how things turned out can keep you from learning and improving.

[00:00:42] Clay Finck: Annie teaches us how to separate decision quality from results, and she introduces the concept of resulting a trap we all fall into and shows how it clouds our judgment. Whether you’re investing, leading a team or making everyday choices. The wisdom that Annie shares will sharpen the way you think, and by the end of the episode, hopefully you’ll have a better framework for making smarter decisions when faced with enormous uncertainty.

[00:01:08] Clay Finck: With that, let’s dive right into today’s episode, covering Thinking and Bets by Annie Duke.

[00:01:12] Intro: Since 2014, and through more than 180 million downloads, we’ve studied the financial markets and read the books that influenced self-made billionaires the most. We keep you informed and prepared for the unexpected. Now for your host, Clay Finck.

[00:01:36] Clay Finck: On today’s episode, we will be chatting about Annie Duke’s book, Thinking In Bets. Annie Duke is not an investor, but she is an avid student and expert on the topic of decision making. Annie spent 20 years as a professional poker player and won a number of major poker events, including the World Series of Poker Gold Bracelet, and earned $4 million in poker tournaments before retiring in 2012.

[00:02:00] Clay Finck: Through her experience playing poker, she realized that she had almost by happenstance entered an arena where she could learn how people learn and make decisions. A poker hand takes about just two minutes, and over the course of a hand up to 20 decisions might be made, and at the end there’s a concrete result.

[00:02:19] Clay Finck: Either you make money or you lose money. The result of each hand provides immediate feedback on how one’s decisions are fairing, but the outcome itself isn’t directly correlated to the quality of one’s decision. Somebody with a two seven off suit can go all in pre flop and still manage to win the hand purely by the luck of the draw.

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