Annie Duke on Making Decisions
Andreessen Horowitz is a well-known venture capital firm that has backed some of the most recognizable companies of the last decade, including Skype, Twitter, Okta, PagerDuty, and GitHub. The company’s founders, Marc Andreessen and Ben Horowitz, also regularly give their opinion on technology, innovation, and the world at large in their blog, including Andreessen's hugely important essay, ‘Why Software Is Eating the World’.
Annie Duke is a World Series of Poker winner and the author of books about behavioral psychology including ‘Thinking in Bets’, a massively popular read here at MyWallSt and one you’ve no doubt heard us mention a couple of times before, including our recent Insight on ‘What Poker Can Teach You About Investing’.
So, when I heard of Duke appearing on the a16z podcast — a show published by Andreessen Horowitz — it was definitely enough to make me sit up and listen.
I’ve included the link to the show below, but here’s a TL;DR too if you’re short on time:
How to become a better decision-maker by getting a good view on the impact of luck and the hidden forces that influence all decisions we make, including:
1.) The Paradox of Experience — Experience is necessary to become a better decision-maker, but all experience can teach us bad or misleading lessons sometimes too. It can feed our biases.
2.) Resulting — Using the quality of an outcome to determine the quality of an underlying decision. In other words, not all positive results come from good decisions.
3.) Hindsight Bias — We aren’t good at considering the knowledge we had at the time we made a decision. Once we know the outcome, we assume that we knew the outcome was always going to occur.
The importance of keeping decision records (like an investing journal) in order to analyze past decisions made.
Why people spend more time analyzing bad decisions (and investments) rather than good ones.
Why pro/con lists are worthless.
How to spend your decision time wisely, including picking the decisions that are worth spending your time on. You can’t take infinite time to make all decisions, so you need to figure out what decisions merit taking time and what decisions you should make quickly.
The Happiness Test is a way for us to figure out how fast we can make decisions.
‘Decision Hygiene’ and making good-quality of decisions and reducing the probability of a bad outcome.
You can listen in to the full episode here, and make sure to keep an eye out for Duke’s new book, ‘How to Decide: Simple Tools for Making Better Choices’.
I know that most of the MyWallSt analyst team are already waiting impatiently for it to drop through their letterbox, so you can definitely expect some Daily Insights related to it in the coming weeks.