Annie Duke: Business decisions amid coronavirus have ‘everything’ to do with poker

Annie Duke, a behavioral scientist and former poker champion, explains why business decisions have "everything" to do with poker.

Video Transcript

ANDY SERWER: Hello everyone, and welcome to Influencers. I'm Andy Serwer. And welcome to our guest Annie Duke, former professional poker champion and author in behavioral decision science and decision education. Annie, great to see you.

ANNIE DUKE: Thanks for having me. I'm excited to be here.

ANDY SERWER: Annie, I guess I'd like to start off by asking you, what are the similarities between poker and business and business decision making?

ANNIE DUKE: Oh my gosh, well everything would be my answer. So poker is a very interesting game. You can think about the difference between, say, a game like poker and chess. Right? So in chess, you can obviously see all the pieces of your opponent, so you could figure out exactly what you're supposed to-- anybody who's seen Queen's Gambit where you can see that Beth is sort of playing out all those pieces, for any move that I'm thinking about I can see what all the possible moves that my opponent could make are, and so on and so forth. In fact, what makes a chess player really great, one of the things is that they can go many moves deep into the game. Right? So that's number one, is that you can see where all the pieces are.

Number two is that there isn't a really strong element of luck, certainly not in the sense of like, you know, someone rolls dice and you get a seven and you get an extra bishop or something, and if it's snake eyes it's like you're in check. Those pieces are only going to move by an act of skill. And you can contrast that with a game like poker where certainly there's a very strong element of luck, in terms of the turn of the cards. They don't have any control over those. And there's also a tremendous amount of hidden information. I know what my cards are, but I don't know what my opponent is holding. And so that makes my judgments under those circumstances subjective.

Now that should sound a lot like business decisions for people, because when we make business decisions we don't really know what the future holds in terms of luck. I mean, just look at the pandemic, right? If we were opening up a retail shop in October of last year, you couldn't have seen that this was, you know, this was just a matter of luck. It's like a bad turn of a card.

There are so good turns of the card. And then there's just a lot of stuff that you don't know. When you enter into negotiation, you don't know what cards your opponents are holding. Right? You have some partial information, but not a lot, and that creates a whole different type of decision problem, and particularly with poker where there's a lot of money at stake, which is true of all of our decisions in business as well, right? You can see where that maps on really nicely, so that if we can understand poker decision making, we could know something better about decision making away from the poker table.