The pervasive uncertainty the pandemic has spawned can fool people into making deeply regrettable decisions, argues decision strategist and $4 million pro-poker winner Annie Duke in an interview with ThinkAdvisor.
For financial advisors, having the option to reverse a decision when new information surfaces should be a top priority, says Duke, bestselling author of “Thinking in Bets” (2018).
She holds that decision-making and poker have much in common: For starters, both are awash in uncertainty and risk.
Duke’s new book is “How to Decide: Simple Tools for Making Better Choices” (Portfolio Penguin-Oct. 13, 2020).
“No one could explain the process of high-stakes decision-making better than Annie Duke,” chess grandmaster Garry Kasparov enthused in a blurb.
A famed top international pro poker champ for 20 years, Duke retired from the game in 2012, pivoting to corporate speaking and decision-strategy consulting. Her clients include Citibank, Gartner, Hartford Funds and numerous other companies to whom she consults privately.
In the interview, she discusses the importance of developing a high-quality decision-making process now to put in place once the pandemic is over.
What she calls “the power of negative thinking” — which can help people react deftly in the face of downturns — is high on Duke’s list of decision-making tools. She explores the topic in our interview.
Her new book is packed with exercises and techniques to help raise the caliber of one’s decisions; and in the interview, she unpacks several.
Co-founder of the Alliance for Decision Education, Duke, 54, now limits her poker-playing to games for charity. As for the $4 million-plus she won as an international tournament champ, she invested the winnings — in her four children’s education.
ThinkAdvisor recently conducted a phone interview with the Concord, New Hampshire-born-and-bred Duke. The conversation included her judgement as to why gut decisions and pros-and-cons lists don’t cut it as high-quality decision-making methods.
Here are excerpts from our interview:
THINKADVISOR: To what extent is the coronavirus pandemic a factor in making important decisions?
ANNIE DUKE: The pandemic is a really interesting learning opportunity. Here’s the way I look at it: In the original book of “The Wizard of Oz,” you needed to put on spectacles with green lenses that lock onto your head when you enter The Emerald City because it really wasn’t The Emerald City — it was a beige city. Likewise, we’re [normally] walking around with “certainty spectacles” on.
What do they do for us?
They make us see certainty where it doesn’t exist: We have an illusion of control; so we think we have much more control over our outcomes than we actually do.
Did the pandemic change that?
Yes. It forced the “certainty spectacles” off our heads because now uncertainty is impossible to ignore. The information landscape is shifting so rapidly. The idea that today will be predictive of what the world will look like in six months isn’t something that people are falling for very much right now.
Once the pandemic is over, will we go back to wearing “certainty spectacles” and see some stability?
Things will still be very, very uncertain. But if you develop a really good decision-making process now, you should be able to make high-quality decisions when the pandemic goes away.
What are some of the less apparent components of uncertainty to focus on?
A really good decision-making process must take into account uncertainty, including luck, which we have no control over. What we do have control over is our reaction to luck and the options we choose that would make it so that luck is more or less likely to go in our favor. You also need to include hidden information in the decision-making process.
When there’s high uncertainty, what should financial advisors keep in mind?