Thinking in Bets
The author was a World Series poker champion. She dealt with uncertainty on a daily basis as part of her career, made use of it to win the game. Uncertainty is ubiquitous, but we don’t think about it and don’t notice it. This books makes me realise and appreciate the roles uncertainty play in our lives.
The author proposed couples of ideas based on Bayesian statistics to deal with uncertainty, which I find it quite apt to apply to management of cracks.
Conventional vs Bayesian statistics
Frequentist Statistics tests whether an event (hypothesis) occurs or not. It calculates the probability of an event in the long run of the experiment (i.e the experiment is repeated under the same conditions to obtain the outcome). The repetitions (i.e. sample size) need to be large enough to yield meaningful conclusions.
Bayesian statistics is a mathematical procedure that applies probabilities to statistical problems. It provides people the tools to update their beliefs in the evidence of new data. It’s a combination of three probability elements. First, what you think about the subject before the study; second, study results; and third, what you think about the subject after taking the study results into consideration. Bayes theorem can be thought of as way of coherently updating our uncertainty in the light of new evidence. It is used when a decision must be made on the basis of a combination of imperfect evidence from multiple sources.
A section in the book deals with irrationalities is quite gripping. It drawn on the works of Dan Ariely - Predictably Irrational
Being aware of our irrationalities is not enough. Knowing that you are looking at illusion doesn’t make illusion goes away. The work around is to carry a ruler and knowing when to use it. Part of why we are irrational is because our beliefs were shaped by the evolutionary push toward efficiency rather than accuracy.
Stanford law review 2012 published a study called They saw a protest.
Two groups of subject saw the same video.
One group was told that this legalised abortion protest occurred at the abortion clinic. The other group was told that the protest was against ban on gay and lesbian soldiers.
Both groups were asked about facts and conclusions from what they saw. Answers were completely different depends on their own political opinions and cultural values.
We might think of ourselves as open minded and capable of updating our beliefs based on new information, but the research has shown otherwise. Instead of altering our beliefs to fit new information, we alter our interpretation of that information to fit our beliefs.
This makes me think of politics in Thailand. When protestors from both sides of the politics are interviewed both said pretty similar things about people from the other side of the political divide i.e. they don’t read and don’t have enough info like I do that’s why they think and behave that way. Lack of information is probably not the reason why people believe in a certain thing or behave in a certain way.
Couples more paragraphs that I like from the book
We are uncomfortable with the idea that luck plays a significant role in our lives. We recognise 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 imagine the world as an orderly place, where randomness does not wreak havoc and things are perfectly predictable. We evolve to see the world that way. Creating order out of chaos has been necessary for our survival.
I had to learn to focus on the things I could control (my own decisions), let go of things I couldn’t (luck), and work to be able to accurately tell the difference between the two.
Improving decision quality is about increasing our chances of good outcome, not guaranteeing them.
Life, like poker, is one long game, and there are going to be a lot of losses, even after making the best possible bet. We are going to do better, and be happier, if we start by recognising that we will 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 calculating our beliefs to move toward, little by little, and more accurate and objective representation of the world. With strategic foresight and perspective, that’s manageable work. If we keep learning and collaborating, we might even get good at it.