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What is behavioral economics? Why does it matter to you?

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Podcast Episodes

What is behavioral economics? Why does it matter to you?

227. Quit: The Power of Knowing When to Walk Away, with Annie Duke

In today’s conversation, I am joined by Annie Duke, a former professional poker player (widely known as one of the best female players in the world) who also has an impressive and fascinating background in psychology, which she will talk about on the show today. I’ve been wanting to have Annie on for ages, she has two other fantastic books called Thinking in Bets and How to Decide, and I am so delighted that she wrote this additional book, Quit, which we are talking about today (and really, she talks about all three books in our conversation).

I am so honored and delighted that Annie took the time to chat with me for this interview. We had a great conversation and ended up chatting for over 90 minutes (with about 80 of those recorded). Here on the show today, we are cutting that conversation down to fit in under an hour but if you want to hear the full conversation in detail, come on over to the BE Thoughtful Revolution membership group — it’s our free community of behavioral economics enthusiasts from around the world, and you can check out the full video interview and conversation. Annie is a wealth of knowledge and insights, so you will want to glean every extra moment just like I did, I’m sure – be sure to stick around for monkeys and pedestals!

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IN A RUSH?

HERE'S A 2 MINUTE TIP.

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SHOW NOTES:

  • [00:40] In today’s conversation, I am joined by Annie Duke, a former professional poker player who also has an impressive and fascinating background in psychology.
  • [03:07] Annie shares her background and how she found herself in the world of behavioral science. 
  • [04:41] Her brother was the one who suggested she play poker and she ended up playing poker for 18 years as her profession. 
  • [06:05] After eight years as a poker player she started getting asked to give talks. The first talk she gave was to a group of options traders and she talked about how poker might inform your thinking about cognitive bias. From there she started getting referrals and spending more time speaking than playing poker. 
  • [07:11] In 2012, she retired from poker to spend more time on the business side of things and started consulting and speaking full-time. 
  • [09:13] If you look at anything on Annie’s journey from the time she entered graduate school, it is all decision-making under uncertainty.   
  • [11:09] The more ways that you are thinking about problems and the different frames that you have to ponder these issues you end up bringing something different to the table. 
  • [12:54] Premortems can be very effective if you combine them with other good decision-making tools. 
  • [15:14] If you use prospective hindsight instead of just forward planning, research shows you will generate 30% more reasons for failure or success if you didn’t do prospective hindsight. 
  • [17:14] Self-serving bias is that when bad things happen to us as individuals we tend to blame them on things that are outside of our control.  
  • [19:49] Other researchers suggest that premortems need to be done in groups to be successful. 
  • [22:42] Thinking in Bets was a book that she had really wanted to write for many years, which is about making decisions under uncertainty. 
  • [25:27] One of the things she really talks about in Thinking in Bets is resulting. Resulting is when we look at other people and assume if they have a bad outcome then they made a bad decision and a good outcome is from luck (whereas when we have a bad outcome it is luck and a good outcome is from our good decision making – this is very similar to fundamental attribution error).  
  • [26:55] She wrote How to Decide as a companion, which had more practical tools for making decisions. 
  • [28:23] Annie shares about writing her new book Quit.  
  • [30:44] Most of the decisions you make you can actually probably make faster. The way to decide if you can go faster is by looking at the consequences of getting the decision wrong. 
  • [33:01] We are really bad at exercising the option to quit when the time comes. The option to quit is very valuable. 
  • [35:02] She shares the many Zoom conversations with influential behavioral scientists she had prior to writing her new book about quitting.  
  • [36:36] Science shows that when we quit, we are usually doing it too late. 
  • [38:45] One of the problems we have is that once we set a goal we are immediately in the losses. 
  • [39:20] Annie shares about the California Bullet Train. 
  • [41:51] After getting the project approved once starting the project they realize they have two big problems… (Why didn’t they “see” them before?) 
  • [44:22] Instead of stopping the project, they approved two pieces of track that don’t address the gigantic engineering problems.
  • [46:13] Monkeys and pedestals is an incredibly helpful framework for trying to figure out how you approach projects to find out the information you need to find out the fastest so you can figure out if it is something you want to stick to. 
  • [47:26] She shares the monkeys and pedestal’s story. You have to start with the monkey (the hard part) of the problem first. 
  • [49:11] When you do but up against hard things you tend to turn to pedestal building rather than to quit (similar to bikeshedding).  
  • [50:28] You should definitely tackle the monkeys first.
  • [51:51] You follow the premortem by looking at the monkeys and pedestals. You figure out what the monkeys are and then you change your plans according to that. 
  • [53:20] Kill criteria are what you could see or find out in the future that would tell you that you ought to quit. 
  • [55:01] There is no point in tackling any low-hanging fruit if you can’t train the monkey. Figure out the hard problem first. 
  • [57:34] Winners quit a lot. That is how they win. Winners sample a lot of stuff, settle on a course of action, tackle the monkeys first, and if the world gives them another signal they switch.
  • [58:41] Winners pick the right things to stick to and they abandon everything else. 
  • [60:52] Melina shares her closing thoughts. 
  • [61:08] Thoughtful quitting, stopping doing things that aren’t serving you anymore isn’t a failure — that is a win. That is a sign of doing great big amazing things! If you never quit, you can never win because you will be spread too thin.

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