Five ways to make better decisions

My family needs to buy a new house. And last weekend, my wife, my one-year-old daughter, and I looked at a house with potential: three bedrooms, big kitchen, furnished basement, a decent-sized backyard, walking distance from the subway. Of course, it wasn’t perfect: it needed some renovation; the street wasn’t the most charming in the neighborhood; and the house was at the high end of our price range. We had to decide quickly, or expect that someone else would take the house. Were we ready to commit ourselves to this house for at least the next few years?

Big life decisions like this – home, career, school, relationships – are hard because there’s a lot that you don’t know, variables and factors you can’t account for completely. You rarely have all the information you would need to make an easy decision.

So what does all this have to do with poker?

The difference between poker and other forms of gambling is the difference between choice and chance. In slots or roulette, a player’s outcome hangs on randomness and luck. In poker, you constantly make decisions that shape your results. A poker player routinely faces situations with incomplete information – you don’t know what your opponent has or which card is next to come. Luck is a factor, but, as in life, it’s only part of what determines your fate. At a slot machine, you push a button. At the poker table, you think.

Poker gives you practice making decisions, big and small, and dealing with the outcomes. Big life decisions are like all-in moves at a poker table: you’re risking a lot, maybe everything. It’s worthwhile to learn to handle those kinds of moments well.

Here are five keys I’ve learned to make good decisions… in poker or anywhere else.

Step One: Gather Information.

Read. Observe. Do your homework. There will always be things you don’t or can’t know, but the key is to learn as much as you can. If you’re buying a house, this means researching crime reports, local school quality, and figuring out exactly how much you can afford. If you’re trying to pick a university, you should walk around the campus, talk to students, and research professors. At a poker table, doing your homework means studying your opponents’ tendencies, paying attention to betting patterns, and noticing who is playing well and who is on tilt. When you’re not in a hand, don’t fall into the habit of staring at the game on the TV across the room: watch the table; watch the players.

Step Two: Weigh the risks and rewards.

As best as you can, assess the potential rewards and value that might come from the cost of your decision. If you’re considering buying a house, but it will require you to have a 90 minute commute to and from work every day, is the reward of the bigger yard and extra space worth the cost of losing three hours a day on the road? If your new job pays less, but you love the work, is it worth the lighter wallet?

In poker, you want to assess the size of the pot or the chips you might be able to win from an opponent in a given hand. Countless books and articles have been written on pot odds, implied odds, and expected value, but the basic principle is straightforward: before you make a move, know what you stand to gain, how much it will cost you, and how likely you are to get a positive outcome.

Here’s the 30-second version of the concept of “expectation”: if, on average, you stand to win more than you lose, it’s a good decision. No one knows what will happen in a single instance, but if the rewards and the likelihood of a positive outcome are in your favor, you’ve made a solid decision. It may not work out, but you would make the decision again the same way the next time, given what you know.

This approach applies to any big life decision: if everything you know suggests that the likely outcome is positive, you can’t ask for much more. Life rarely gives us absolute guarantees.

A common refrain among poker enthusiasts is the saying: “don’t be results-oriented.” At first, this notion seems counter-intuitive: after all, results are what matter, right? But the idea is a plea to step back from an individual outcome and take the wider view of your overall decision-making process.

An individual result may be bad, even disastrous. But over time, the positive outcomes of a habit of good decisions should outweigh occasional bad results. It’s a good way to look at every decision you make at the poker table, and not a bad way to approach everything else as well.

Step Three: Narrow the Possibilities.

A wide-open question is overwhelming. Instead, if you can narrow down the possibilities, you have a more manageable choice to ponder. It’s easier to decide Door A vs. Door B, rather than which random direction to walk.

“What should I do with my life” isn’t easy to answer: possibilities are endless. Instead: “should I go to business school or law school” is something you can grapple. Narrowing the possibilities is key to making manageable decision.

Poker teaches you to narrow possibilities all the time. Poker players call it “range”: given the limited, incomplete information at your disposal, you try, as best as you can, to narrow the possible cards an opponent may have. You aren’t likely to guess an exact hand, but you might be able to deduce several possible hands that explain his actions.

For example, let’s say you’re playing hold’em and holding a pair of jacks. You raise preflop and a good, experienced conservative player goes all-in. What do you do? You should try and deduce the range of cards he could be holding that explains his move.

Against a typical tight opponent, you might expect someone to try this with AA, KK, QQ, AK, and maybe JJ or TT. You might be wrong, but it at least gives you a likely group of possible cards to consider when making your decision. If you narrow those possibilities to those six possible hands, you’re losing to half of them, plus tying one, beating one, and are 50/50 against one. It might be a good time to fold.

If, instead, you’re playing against a loose-aggressive maniac who might make this move with any ace or any pair, your JJ looks pretty strong, and it may be a good call.

Step Four: Consider the intangibles.

A few years ago, I quit a high-paying corporate job and took a new, lower-paying one with a nonprofit political organization. I thought I’d found my dream job, but it wasn’t. But before I moved onto another job, a co-worker introduced me to the woman who would become my wife.

Sometimes we make a decision, and though it doesn’t go the way we expect, the outcome is still positive.

Likewise, at the poker table, a decision that doesn’t work out can pay off later. Earlier this year, when playing with strangers at the Commerce Casino, I made a bluff that got called. When I turned over my cards and showed that all I had was seven-high, a lot of people laughed, including the guy who took my chips. But as a result, most of the people at the table mistakenly got the impression that I was a reckless, loose player. Later on, when I made big bets with strong hands, they often called, paying me off. My decision to bluff earlier had failed, but as an unintended consequence, it helped set me up to win more hands later.

It’s hard to expect or predict these kinds of unexpected benefits, but when you consider a decision, it’s worth thinking about the possible secondary benefit. When I took that job, I didn’t expect to meet a partner for life, but I did consider that a change would give me the opportunity to meet a new circle of people. And at the Commerce, when I made that bluff, it occurred to me that if it failed, it might at least create an image of me to other players that I might later exploit.

And then there are the bigger intangibles.

You can read everything and research something thoroughly, consider the risks and rewards, and narrow down the possibilities, but after all that, sometimes you just have to listen your instincts.

Your gut feeling isn’t meaningless. It’s not mathematical or scientific, but it might be right.

Step Five: Decide, then live with it.

The hardest thing to learn about making tough decisions is to let go afterwards. If you took your time, collected info, weighed risks and rewards, considered a narrow range of possibilities, thought about intangibles, then made the best decision you could from all of that, it’s all you can do.

As we say at the poker table: “you got your money in good.”

Ultimately, what happens next is moot. If things go well, great. If they don’t, what else could you have done? A bad outcome doesn’t mean you made a poor decision. Sometimes good decisions lead to ugly results.

Let’s say you have two aces. You raise and the guy to your left goes all-in. You call and he shows a pair of threes. On the river, he hits one of his two outs and gets a set to beat your aces. You made the correct decision, but your results were bad. Four out of five times, though, you would win that same hand. The decision was still correct, even though luck dealt you a punch to the stomach. And the next time someone goes all-in preflop and you’re holding aces, the right decision, once again, would be to call.

When you make an impulsive, reckless, thoughtless decision, there’s plenty of reason to second-guess yourself. Beat yourself up over bad decisions, not good decisions that turned out bad.

My wife and I decided against the house. It had a lot to like, but we just weren’t convinced it was the right choice, especially at the price they were asking. We weren’t ready to go all-in for the next few years and commit ourselves to a pricey townhouse that needed renovation. We aren’t waiting for the perfect house — we don’t need aces — but we need something better than what we found. That house was like a pair of tens: pretty impressive, and tempting to play. But we’re holding out for something stronger.

Two days later, someone else bought the place. I didn’t lose sleep over it.