Annie Duke: preference

Transcript context

…There may be cases where thinking probabilistically conflicts with the kind of authenticity. Say one of our audience members is out on a date, should he or she set up a kind of mental probability ticker? Well, you start off the date thinking, “The chance I marry this person is 2.3 percent.” And then as the evening progresses, the number might go up. It might go down. It’s hard for some people not to think that way. Yet it seems, actually, your chance just might lower if you even open up that door at all, right? Actually, I love that example. I think it depends on what your goal is, right? If your goal is to find a great match, then I think that that’s actually helpful because the fact that you’re thinking that way means that you’re more likely to be talking to somebody who is compatible with somebody who thinks that way. So while it might reduce the number of people that you might match with, the number of people that might end up being long-term, the quality of the match, I think, would go up because you would be more likely to be compatible in terms of the way that you thought about the world. I always think that this goes into the category of what are you doing with the information? One of the things that I really try to think about is what’s the difference between — and I think this goes into this category, and correct me if I’m misunderstanding — but I think about what’s the difference between a goal and what’s the difference between thinking about what your expected value is. I think that we confuse the two things — that we’re allowed to set really high goals and believe that we will reach them, and at the exact same time, we can be thinking in expected value, which of course is just thinking probabilistically combined with what the payoffs are. Understand that the expected value may be well below what our goal is. And I think that these two things can actually live in the same space. It’s kind of a false dichotomy to think that you can only do one thing or the other, that if you have this kind of running ticker of, let’s call it our expected value, on the date that you can’t also be having high aspirations and some optimism about the date working out. I’m just a really big believer that those two things — not only that they can live in the same space, but it’s actually useful for them to do so. Maybe it’s a bit like hurdle rates for private business investment. A business might set a hurdle rate of 50 percent, knowing deep down underneath, maybe, they’d be happy with 23 percent, but they know along the way in the process, gains will be overstated, costs understated. So maybe if you’re looking for friends or a maid or a marriage partner, should you be thinking probabilistically — but with bad probabilities — and just set all your hurdle rates too high because otherwise you’re going to fool yourself and leap at silly mistakes?…

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