Thinking in Bets
What It Is
Thinking in Bets is a framework for improving decision quality by separating decisions from outcomes. The core insight: a good decision can have a bad outcome, and a bad decision can have a good outcome—luck is always involved.
Most people judge decisions by their outcomes (called "resulting"). This is backwards. You can only control the quality of your decision, not the outcome. Annie Duke, a professional poker player turned decision strategist, built this framework from poker, where you're forced to make decisions with incomplete information under uncertainty—exactly like business.
The key shifts:
- Move from "Was I right?" to "Was my thinking process good?"
- Move from "What happened?" to "What did I know at the time?"
- Move from implicit assumptions to explicit, testable beliefs
When to Use It
Use Thinking in Bets when you need to:
- Evaluate past decisions without outcome bias clouding judgment
- Make decisions under uncertainty where luck will influence results
- Improve team decision-making in meetings and planning
- Set up pre-mortems and kill criteria for projects
- Shorten feedback loops on decisions with delayed outcomes
- Reduce cognitive biases like overconfidence, hindsight bias, and sunk cost
- Run better meetings that surface true opinions, not groupthink
When Not to Use It
- The decision is trivial with low stakes
- You have perfect information (rare)
- You're looking for permission to take a risk you've already decided on
Patterns
Detailed examples showing how to apply Thinking in Bets correctly. Each pattern shows a common mistake and the correct approach.
Critical (get these wrong and you've wasted your time)
| Pattern | What It Teaches | |---------|-----------------| | resulting | Don't judge decisions by outcomes—judge by the process | | implicit-vs-explicit | Make intuitions explicit so you can test and improve them | | discover-discuss-decide | Separate discovery (async), discussion (meetings), and decisions | | premortems-without-kill-criteria | Pre-mortems are useless without committed actions |
High Impact
| Pattern | What It Teaches | |---------|-----------------| | overconfidence | Use ranges, not point estimates—you know less than you think | | hindsight-bias | What seems obvious now wasn't obvious then | | sunk-cost | Past investment is irrelevant to future decisions | | anchoring-in-groups | First opinions contaminate everyone else's judgment | | long-feedback-loops | No feedback loop is actually long—find intermediate signals | | seeking-alignment | Stop seeking agreement—it's coercive and unrealistic |
Medium Impact
| Pattern | What It Teaches | |---------|-----------------| | confirmation-bias | Seek out information that proves you wrong | | mental-time-travel | Ask: "How will I feel about this in 10 years?" | | forecasting-ranges | Replace certainty with calibrated probability ranges | | nevertheless-leadership | Hear everyone, then decide—"nevertheless" is your friend |
Deep Dives
Read only when you need extra detail.
references/thinking-in-bets-playbook.md: Expanded framework detail, checklists, and examples.
Resources
Books:
- Thinking in Bets by Annie Duke — the core framework
- Quit: The Power of Knowing When to Walk Away by Annie Duke — when to stop
- Thinking, Fast and Slow by Daniel Kahneman — the psychology underneath
Related:
- Superforecasting by Philip Tetlock — calibrated probabilistic thinking
- The Scout Mindset by Julia Galef — seeking truth over confirmation
- Algorithms to Live By by Brian Christian — decision theory made practical
Annie Duke:
- Substack: "Thinking in Bets"
- Course on Maven: Effective Decision Making
- Alliance for Decision Education (co-founded)
Framework based on Annie Duke's work and her conversation with Lenny Rachitsky on the Lenny's Podcast.