How to Make Winning Decisions: Luck and Uncertainty

Source: Michał Parzuchowski/Unsplash, used with permission

This post is Part 1 in a 7-part series.

Before Donald Trump became a US President, I used to watch his reality show Celebrity Apprentice, where stars competed in tasks to raise money for charity. I was most impressed by the 2009 runner-up, Annie Duke, PhD, who actually raised 209% more in the final challenge than winner Joan Rivers did and was the first contestant to ever reach the finals with a perfect record of wins as Project Manager.

Duke’s poker background was a key reason for her success in making winning decisions. Before Celebrity Apprentice, Duke had already pocketed more than $4 million in tournament wins and remains the only woman to have ever won both the World Series of Poker Tournament of Champions and the NBC National Poker Heads-Up Championship. But poker mastery wasn’t Duke’s only secret weapon.

Before her poker career, Duke had completed all but the dissertation (“ABD”) of her cognitive science PhD via a prestigious National Science Foundation Fellowship at an Ivy League college. She had quit her studies to dominate poker tables, but later she quit poker to return to the University of Pennsylvania, finish her PhD, consult for companies, and write a slew of books. Appropriately, Duke’s books tackle making better decisions. Her latest is Quit: The Power of Knowing When to Walk Away.

After devouring Duke’s books, I got the chance to pick the brain of this champion decision-maker. Dr. Annie Duke’s insights follow, and her tips can help us all get better at making decisions (including judging when to quit) in this uncertainty-filled world.

Luck and Uncertainty Are Unavoidable

Jenny Grant Rankin: There were a lot of games played in your house growing up. How did games, especially your extraordinary poker career, hone your critical thinking skills?

Annie Duke: Playing cards really gets you to understand decision-making under uncertainty. Card games are a microcosm of the types of decisions that we all have to face on the regular: small decisions like what to order off a menu, but also big decisions like who to marry. Across that gamut, those decisions share two qualities: luck and uncertainty.

Quality number one is that the outcome of any of those decisions is going to be influenced by luck. We don't have control over how things turn out. A very simple way to understand that is that you can go through a green light and get in an accident, even though you literally followed all the rules, because there's some probability anytime you follow traffic laws that something else is going to happen that's going to cause you to get in an accident. And that's just luck.

There are all sorts of ways in which that's true. For example, people talk about the genetic lottery. It’s not that we don't have any control over our health outcomes, but there's a huge influence of luck in our health outcomes. You can have somebody who smokes a pack a day for 60 years and never gets lung cancer, and you can have somebody else who never smokes and lives a healthy life but still gets lung cancer. Or consider ordering off a menu. It feels like you have a lot of control over it, but you didn't cook the food, you don't control the wait staff, and you don't control what's happening in the kitchen. You don't know what's going on there in terms of the influence of luck on that outcome.

Source: Amol Tyagi/Unsplash, used with permission

Let's think about that in terms of a card game. Obviously, there's a random deal of the cards. So, you can make decisions that will hopefully increase the chances that things will turn out well, but there aren't guarantees. Even if you've made a decision that's going to turn out well 80% of the time, it means 20% of the time you're going to observe something bad. And you actually don't have control over that; you have to accept that and live with your decision.

The second quality that decisions in both games and life share is that there's much you don't know. When you are ordering off a menu at a restaurant where you have never eaten before, there's just a whole bunch of stuff you don't know about. Like, how is the dish prepared? How much salt is there going to be? I wish I knew, but I don't. Or if you’re wondering, “Who am I gonna marry?” you're making guesses based on dating or living with each other, but you don't really know what the marriage is going to look like in 10 years. You don't know everything there is to know about the person. You can test it, and you can try to gather more knowledge, but at some point you have to decide. Or think about how little you know about the people that you hire in comparison to all there is to be known.

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In card games, there's a very easy analog to that, which is that I can’t see what the other people’s cards are. That's true whether I'm playing bridge, gin rummy, hearts, spades, or go fish. I can try to guess at what those cards are (and the better the player the better I'm going to be at guessing, such as by tracking the cards you're asking me for), and that skill element could help me narrow it down, but I can't ever get perfect because I simply don't know what the other person's cards are.

Those two things are true, and growing up playing cards I understood that very deeply from a very young age. It's the topic that I've been obsessed with my whole life, ever since I started playing cards when I was little: We’re not omniscient, and we don't have a time machine, so how can we still make good decisions under those circumstances?

Continue to Part 2.