Thinking in Bets: Why You’re Evaluating Decisions the Wrong Way
- 1 day ago
- 2 min read
By Gene Killian
A very useful framework for effective high-level decision-making comes from the concept of “thinking in bets,” popularized by professional poker player and author Annie Duke.
The idea is simple: Stop evaluating decisions after-the-fact as being “right” or “wrong,” and start evaluating them based on probabilities and expected value as you perceived them at the time you made the decision.
In business – especially at the executive level – outcomes are noisy. You can make a well-reasoned, data-informed decision and still get a poor result because of factors outside your control.
You can also make a poor decision and get a good result, just through dumb luck.
If you judge decisions purely by outcomes, you end up reinforcing bad processes and abandoning good ones.
Thinking in bets reframes that.
A good decision is one where you’ve assessed the available information, assigned realistic probabilities to different outcomes, and chosen the path with the best expected value. If that process is sound, the decision is sound – regardless of how it turns out.
In professional poker, there’s a term for the mistake most people make by judging decisions through their outcomes: “Resulting.”
That’s when you look back at a decision and assume that because the outcome was bad, the decision was too. Not necessarily.
And if you think that way, you start learning the wrong lessons.
Instead, look at what you knew at the time. How did you assess the probabilities? Was the process sound? That’s what matters. It also changes how you think about risk.
When you work in probabilities, you’re forced to be specific. What do you think is likely to happen? What are the downside scenarios? How meaningful is each outcome? What are the anticipated transactional costs to get to the likely result?
In his wonderful book “Think Again: The Power of Knowing What You Don’t Know,” organizational psychologist Adam Grant suggests the following additional questions: What leads you to your assumptions? Why do you think your assumptions are correct? What might happen if your assumptions are wrong? What are the uncertainties in your analysis? What are the anticipated advantages and disadvantages of a proposed course of action?
That kind of clarity leads to better decisions. It also keeps you out of binary thinking, which is how most bad decisions get made.
Another piece of this is control.
Before I make any decision – especially in negotiations or complex strategic situations – I try to separate what’s within my control from what isn’t. I can’t control market reactions, counterpart behavior, or broader economic conditions. I can control my preparation, my analysis, my strategy, and my execution.
That’s where the advantage is.
In negotiation, preparation is entirely within your control. I’ll often spend several hours preparing for every hour I expect to be in the room – defining objectives, mapping incentives, identifying walk-away points, and testing assumptions.
That doesn’t guarantee a good result. But it improves the odds. And it ensures the decision itself is sound.
Over time, this creates a different feedback loop. The question isn’t “Did this work?” It’s “Given what I knew at the time, was this a good decision?”
In an environment where uncertainty is constant, that’s the only question that actually improves your judgment.
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