Lecture on Decision-Making and Quitting with Annie Duke

Introduction

• Speaker: Annie Duke, retired professional poker player, author.
• Topics Covered: Decision-making, quitting, cognitive biases.

Why Quitting is Difficult

• Cultural Bias: Phrases like "quitters never win" discourage quitting.
• Cognitive Biases:
  • Sunk Cost Bias: Difficulty in abandoning investments of time, money, or effort.
  • Endowment Effect: Overvaluing what you own.

Sunk Cost Bias

• Continuing based on past investments (time, money, effort), not current value.
• Example: Holding a stock now at $40 that you bought at $50.
• Solution: Evaluate if you would start the investment today.

Expected Value in Decision-Making

• Expected Value: Weighing probabilities and outcomes.
• Consideration of personal value and goals.
• Example: Climbing Mount Everest decisions based on survival probabilities.

Quitting vs. Failure

• Failure: Not stopping something worthwhile or continuing something not worthwhile.
• Kill Criteria: Predefine conditions under which you will quit.
  • Example: Mountaineers use turnaround times.

Decision-Making Biases

• Resulting (Outcome Bias): Judging decisions by outcomes instead of decision quality.
  • Example: Criticism of play calls in American football.

Intuition vs. Analysis

• Intuition: Can be accurate but needs explicit modeling to spot errors.
• Develop a decision rubric to reduce noise and bias.

Group Decision-Making

• Nominal Groups: Gather opinions independently to avoid contamination.
• Diverse Perspectives: Encourage different viewpoints for comprehensive analysis.

Gender and Risk-Taking

• Men are generally more risk-seeking than women.
• Importance of diversity in decision-making teams.

Personal Decision-Making

• Seek advice from knowledgeable people without revealing your own opinion.

Lessons from Poker

• Feedback Loops: Understand and evaluate decisions, not just outcomes.
• Bluffing: Balance risk and expected value.

Current Interests

• Focus on how facts are modeled and interpreted rather than misinformation.

Advice to Young People

• Control what you can: the quality of your decisions.
• Luck is uncontrollable; focus on improving decision-making skills.

Conclusion

• Improved decision-making leads to better personal and societal outcomes.