Betting your life on it (literally)

Hello! I’m James Hsu, co-founder of CardBoard Live, author, technologist, and host of the Humans of Magic podcast.

Every Monday, I share what’s on my mind. In the midst of the pandemic, I’ve come to realize that one of the things that truly bring me joy — writing — is missing from the equation. This is my attempt to rectify that.

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On a recent episode of the All-In Podcast, Jason Calacanis asked his guests to pick the winners of the upcoming 2020 American election.

What’s interesting is not so much the question itself, nor the set of answers, but how Mr. Calacanis asked the question:

“Who would you pick to win the upcoming election, if you had to bet your life on it?”

“Who would you pick to win the election, if you had to stake your entire fortune on the result?”

He didn’t just ask his guests to pick a winner. He asked them to figuratively bet their life on it.

Call this the skin-in-the-game principle. If you’re invested in the result through having something to gain or lose then you will take the decision more seriously.

Mr. Calacanis is a poker player. As I listened to the podcast, I wondered if he had read Maria Konnikova’s new book, The Biggest Bluff.

The Biggest Bluff is a fascinating chronicle of Ms. Konnikova’s journey from journalist to professional poker player.

Highly accessible to non-poker players she takes the time to explain the basic concepts of the game The Biggest Bluff is worth picking up if you have the slightest interest in psychology, gaming or the decision-making process.

Ms. Konnikova writes:

“Betting—that bête noire that seems to be such a stumbling block for even rational minds when you try to explain the skilled nature of poker—is actually at the heart of what makes it superior to almost any other game of skill: betting on uncertainty is one of the best ways of understanding it. And it is one of the best ways of conquering the pitfalls of our decision processes in just about any endeavor.”

She continues with an Immanuel Kant reference:

“In his Critique of Pure Reason, the German philosopher Immanuel Kant proposes betting as an antidote to one of the great ills of society: false confidence bred from an ignorance of the probabilistic nature of the world…the fact that to our minds, 99 percent, even 90 percent, basically means 100 percent—even though it doesn’t, not really.

‘It frequently happens that a man delivers his opinions with such boldness and assurance that he appears to be under no apprehension as to the possibility of his being in error,’ Kant writes. ‘The offer of a bet startles him, and makes him pause.’ Now that he has something real at stake, he has to reevaluate just how sure of a sure thing his opinion really is.”

This is valuable insight for several reasons.

Check your certainty. Are you “100% sure” about a decision, or are you merely “51% sure”?

There is a difference, but our mind may be operating in binary “yes” or “no” mode.

Psychologically, it is better to stake something (even an amount as small as $1) in the result, when making a decision.

If there is a tangible “cost,” then the decision-making will be more measured.

This is why I like to wager money on the outcomes of real-world events. It gets people to confront their own truths.

People love to type lots of words about how Team X or Player Y is a “lock” to win a contest.

I say, let’s wager on it. Betting on an outcome is the purest expression of one’s belief in said result.

Be cognizant that the quality of your decisions when making them for yourself vs. making them for someone else can vary.

It is worthwhile to frame decisions as “what would I do,” even if it’s not actually for yourself.

This harkens back to the skin-in-the-game principle. It also serves as a reminder that self-interest is a major force in the decision-making process.

The Biggest Bluff is a great read, and I recommend it to both poker players and non-players.

More observations about the book:

  1. Poker is about making good decisions, period. The money is just a piece of the toolbox.
  2. Ms. Konnikova is a trained psychologist, which helps frame the discussion and gives her exploration an added sense of authority.
  3. Her mentor, Erik Seidel, gives her one of the most important pieces of advice for success in poker: “Less certainty, more inquiry.” This is fitting in so many aspects of life.
  4. Ms. Konnikova describes how she manages and overcomes her struggles with “tilt” playing sub-optimally due to emotion. There is perspective here that all poker players can appreciate.

Still on the fence? Here’s a book excerpt, and Ms. Konnikova’s appearance on The Daily Stoic podcast.

That’s a wrap! See you next week.

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