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Writer's pictureNick Allen

Evaluating decisions

Our most recent newsletter discussed how decision-making in Texas hold’em poker has some similarities with decision-making in everyday life. In both cases, you’re working with incomplete information. Beyond that, the end result in either case has almost as much to do with luck as it does skill. This is where people can fool themselves, both at the poker table and in everyday life. Say you have a 2% chance of winning a hand, but decide to lay down a big bet. Is this a good decision? Of course not, but 2% of the time you’ll be rewarded for it.


There’s nothing wrong with getting lucky, but the problem comes in the way we respond to these scenarios. If you’re evaluating your decision based on the outcome (which our brains tend to do), then you can convince yourself that this was in fact a good decision. Without knowing it, you’ll be likely to make the same poor decision when a similar situation arises.


Attribution bias describes the tendency we all have to overestimate the role of dispositional (internal) factors while judging other people’s actions, whereas we overestimate the role of situational (outside) factors in our own decisions. Simply put, we tend to give ourselves the benefit of the doubt, while holding others personally responsible for the outcome of their actions. I think this is why the poker scenario above tends to play out when it comes to individuals. People want to claim responsibility for everything that goes right, even if the positive outcome was purely the result of luck.


As described by attribution bias, the scenario is reversed when it comes to our evaluation of other people’s decisions. It’s easy for us to say that someone got lucky when it appears this way. When someone else’s decision leads to a poor outcome, it is natural for us to blame that person for the results.


Former professional poker player Annie Duke, who is now an author and decision strategist, uses the story of Super Bowl 49 and Seattle Seahawks coach Pete Carroll to demonstrate this point. With 26 seconds left in the game, Carroll and his staff made what is often referred to as the “worst play call in NFL history.” It’s seen this way, of course, because the result was negative. The Seahawks lost the game in stunning fashion, with quarterback Russell Wilson throwing an unlikely interception at the goal line.


The key word there is “unlikely.” According to Duke’s review of 15 years of NFL data, the chances of an interception in that scenario are less than 2%. The chances of a game-winning touchdown were much higher, and the critical thing to realize is that an incomplete pass, another likely outcome, does zero harm to the Seahawks. With 26 seconds and only one timeout, a clock-stopping pass play represented the Seahawks only opportunity to take three shots at the end zone. Why not take that extra shot? Was there some risk involved? Certainly. But the Seahawks’ overall odds of winning the game were improved by this decision, so it was objectively the right one.


The question is whether Pete Carroll would make the same decision today if he were to face the same scenario again. It would certainly take a lot of guts, given the public outrage over his original decision. Nevertheless, making that decision again would be the right choice, and perhaps an NFL coach backed by a full analytics team would stick to what he knows is right.


For the rest of us, it’s essential to tune out the noise both from outside and from within the primal part of our brain that’s addicted to positive outcomes. Luck, both good and bad, plays an enormous role in everything that happens to us. It’s important to study the outcomes of your decisions, but be aware of their deceptive ability. We must try to look objectively at each of our decisions and the full spectrum of possible outcomes, and train ourselves to make decisions that give us the best chance of success in a world filled with uncontrollable factors.


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