Making Decisions Without All the Facts

(Bloomberg View) -- How can you make intelligent decisions when you don’t have a lot of information? Are you unsure whether luck or skill determines an outcome? Do you engage in “resulting?”

These issues and more are the basis for my Masters in Business conversation with Annie Duke, 2004 World Series of Poker winner, and at one point the winningest female poker player. She is also the author of “Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts.”

Duke discusses her strategies for making decisions, employing process-oriented methodologies, and understanding the role of luck in outcomes. Poker players try to avoid the intellectual foible of “resulting” -- looking at a single outcome as opposed to considering the broader spectrum of probabilities.

When poker players win, they must separate luck from process; if they can figure that out, they can improve future outcomes and understand what was attributable to skill and what was attributable to randomness. Similarly, when a player loses, understanding what would have been the best move relative to the probabilities is just as significant.

She notes how helpful her studies in cognitive psychology and biases were for her poker game.

Her favorite books are cited here; our conversation transcript is available here.

You can stream/download the full conversation, including the podcast extras, on iTunesBloomberg and Overcast. Our earlier podcasts can all be found on iTunesOvercast and Bloomberg.

Next week, we chat with Patty McCord, the chief talent officer at Netflix for 14 years, and author of the new book “Powerful: Building a Culture of Freedom and Responsibility.”

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Barry Ritholtz is a Bloomberg View columnist. He founded Ritholtz Wealth Management and was chief executive and director of equity research at FusionIQ, a quantitative research firm. He blogs at the Big Picture and is the author of “Bailout Nation: How Greed and Easy Money Corrupted Wall Street and Shook the World Economy.”

To contact the author of this story: Barry Ritholtz at

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