Recorded June 24th, 2020

Read the full conversation

TYLER COWEN: And how does one introduce Annie Duke? I would say, most of all, she is a force of nature, a best-selling author in multiple books, a very famous poker player, an expert in decision theory, and she has a new book coming out this September, called How to Decide: Simple Tools for Making Better Choices. Annie, welcome.

ANNIE DUKE: Thank you for having me. I’m super excited to dig in and get into this conversation.

COWEN: Let me start with a simple question. How can we spot situations when thinking probabilistically is likely to make our decisions worse rather than better?

DUKE: How can we spot situations when thinking probabilistically is likely to make our decisions worse rather than better? That is such an interesting question. Honestly, I would say that those situations would only be . . . In some ways I’m not sure that this means that you’re not thinking probabilistically. It’s just what do you do with the information? But there are certain times when thinking through what the probabilities are in terms of what your reaction is — given the downside risks that you might be exposed to — wouldn’t make sense.

The classic example would be the sensitivity versus specificity argument. If I’m out on the savannah as an evolving human and I hear rustling in the grass, it’s probably not great for me to think, what’s the probability that that’s a lion? Because the downside is so great. The magnitude of the downside — dying — is so great that thinking categorically in that . . . just yes or no in that situation probably makes sense for survival. But I would love to hear your thoughts on that because I’m kind of hard pressed to think of a lot of examples in which thinking probabilistically isn’t helpful.

COWEN: 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?

DUKE: 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.

COWEN: 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?

DUKE: Just off the top of my head, yeah, I think so.

[laughter]

On what we will and won’t bet on

COWEN: What are the decisions in our own lives that we should not be willing to bet on? You go to your friend. Your friend says, “Oh, I’ll bet you on that.” For which of your decisions should you say, “No, I’m not willing to make you a bet on that.” Like will your kid into Princeton? Should you be willing to bet on that with your best friend?

DUKE: It depends on the friend. This is something where I think that it’s actually really important in our lives to understand what the purpose of the interaction is. There are certain friends where I would absolutely make that bet. In fact, I can tell you a story from my own life, but this has to do with is this part of what’s going on in your group in terms of the way that you’re thinking? So that it doesn’t actually jeopardize other aspects of the friendship.

So when I went on my first date with my husband, my brother and brother-in-law immediately decided to make a market, and it was whether we were going to get married. Now to be fair, my husband and I — before we went on our first date, we’d been friends. Both my brother and my brother-in-law knew my eventual husband, but this is when we’re going on our first date. They make a market. I think that my brother-in-law ended up bidding 23.

My brother then called me up, cracking up, that my brother-in-law had bid 23 when we hadn’t been on a first date yet. And I then started laughing at my brother, said, “Well, that means you had to bid 22. Why are you laughing at him? You somehow bid 22. It’s our first date.” Now, that’s because we’re all people who sort of think this way. And so this sort of becomes the fun of the friendship, but there are other people . . .

I think about friends as serving different purposes. I have friends who I play tennis with, and I would never make a bet with them about whether their child was going to get into a certain university, particularly if I was going to take the other side, the side that they didn’t want of the bet. Because I think that people can interpret that as you think that that’s what’s going to happen. Because these things settled to one or zero.

So if I were to get on the other side of that, if I felt that the price was right, I think that they could interpret that as me saying, “I think it’s going to settle to zero.” And I don’t think that that’s good for some friendships. So I don’t think that you need to bring everybody in your life into this type of thinking. And you can understand that different people bring different types of value.

COWEN: Let’s say you’re betting on sports teams. Should you bet on your favorite team? Or should you bet on a team you hate to hedge your utility?

DUKE: [laughs] Well, personally, I would only bet if I felt like I was getting the best of it. But that being said, I suppose there could be isolated situations . . . I’m an Eagles fan. So obviously it took a really, really, really, really, really long time for the Eagles to win a Super Bowl.

When they did get to the Super Bowl, it might make sense — given the fact that I can have different values. I can want to make money. I can want to have an emotionally good feeling. That’s another way that I can experience a payoff — it might make sense for me to bet the other side, just so that I get some happiness, even if my team loses.

I think when it comes to the Eagles, I don’t know if that would be enough. I’m not sure what the number was they would have to win, where I would be happy that that team lost. I guess you’d have to figure out what that indifference point is. But yeah, I think that that’s an important thing to think about, right? Payoffs are not always monetary. They’re sometimes emotional, so sometimes you can hedge the emotional downside with a monetary upside, and I guess you could figure out what the indifference point is to that.

COWEN: Is there a limit to the process? I think a lot of people would be reluctant to bet on their own divorce. No one would say, “Well, I’ve hedged my position.” On the other hand, the exact same people are happy to buy life insurance, and they think of that as noble, right?

DUKE: Yeah.

COWEN: And they say, “Oh, well, I’ve hedged my position.” What’s exactly the difference that accounts for the things we’re reluctant to bet upon?

DUKE: That’s such a great question. I think a little bit of it is magical thinking, which I’ll get into in a second. I think a little bit of it is this kind of strange thing about hedges, that we’re obviously hoping that we never have to use them. So when we do, I think that often then, in some ways, we’re happy. And then when we don’t have to use them, I think we’re sad that we had those positions on in the first place.

What I think is that there are certain things about us and certain beliefs that we have that are very, very central to our identity. So when we think about something like fire insurance on our house — what home we live in, in terms of that kind of choice and whether it actually burns down — that feels very much like a matter of luck that’s happened to us.

I think it’s easier for us to hedge against it because we’re not feeling that we did anything to make the bad thing happen. So it gets out of the emotional space because we can offload it to luck.

But when we’re talking about something like our marriage, now it has to do with “What’s our commitment? What’s the commitment that that person has to us?” And that now goes into this area of things that we’re making decisions about, things that have to do with who we are personally. And I don’t think we like to hedge very much against our identity.

And on top of not wanting to hedge against our identity because we think of our identity as very categorical, and that really gets into that emotional space about who we are. but I think that on top of that, we have this kind of idea — and this goes into some of my quibbles with things like The Power of Positive Thinking, which ultimately realizes into The Secret — that we have this idea that if we do hedge against something, that somehow if the bad thing happens, we caused it. And this is particularly problematic in situations that do have very high emotional valence.

Obviously, the hedge that you would put on your marriage is to have a prenup. And we know that only about 5 percent of married couples end up with a prenup. And people are very emotional about that, and they’re very against it because they say, “Are you predicting I’m going to fail?” It’s a little bit like the betting problem, right? Am I going to bet with you about whether your child gets into Princeton? If you have a prenup, it feels like not only are you predicting that you’re going to fail, but then if the failure happens, perhaps you caused it in a magical thinking kind of way.

But this goes into this category of like, how can you be a good decision maker if you’re not really thinking about the negative outcomes that could occur? And then trying to get out in front of those in a variety of ways, one of which might be to hedge. And one of the issues that I have with the literature and The Power of Positive Thinking, which I think ultimately expresses itself through the book The Secret . . . Are you familiar with the book The Secret?

COWEN: Yes.

DUKE: Okay. I think it ultimately expresses itself through The Secret. It’s this idea that if you imagine success, it shall happen, and if you imagine failure, that also shall happen. The mechanism of that is unclear, and, of course, The Secret ends up positing this very strange, this really kooky mechanism, which is your thoughts have magnetic power that actually attract the things that you’re thinking about to you. So if you think about a traffic jam, you’ll end up in one, which is obviously really kooky.

But I think that that’s kind of how the human mind works. If I enter into a marriage and I do put the hedge on, which is a prenup . . . I think that the way that our minds work, it says, “Okay, now I’m going to cause that to happen.” That somehow that’s saying that I think it’s going to happen, and I’m going to cause it to happen, as opposed to just saying there’s all sorts of negative routes that your life can… and you’re more likely to have success if you can think about what those routes are and actually get out in front of them.

COWEN: I’m not a gambler myself, and I don’t understand gambling very well, but maybe you can explain it to me. I read an article in the paper today that many gamblers are now betting on shark migration patterns because a lot of the horse races are shut down and dog races are not running. Shark migration patterns — that seems to me also a zero-sum game. Why don’t you all just bet on equities, which at least, we hope, is a positive-sum game? Why do these zero-sum games exist when there’s this one huge, really quite liquid positive-sum game? And I can get as excited about a company as about a horse, right?

DUKE: Well, first of all, I haven’t played poker since 2012, so I’m definitely not betting on shark migration patterns over here.

One of the things that I used to say about poker was that you better not be willing to be a poker player unless you want people to endlessly discuss golf propositions. A lot of poker players play golf, and they’re always trying to figure out how many strokes a side, and are we playing a NASA, a scramble, or whatever. And there’s endless conversation because they basically want to turn everything into making a market.

COWEN: To become detached?

DUKE: I think they just like the action. And I think that, to your point about the zero-sumness of it all, I think they really want to say, “If you state a belief, I might be on the other side of that. And there’s going to be some price at which we can find a place where you’re willing to take one side and I’m willing to take the other, and let’s do that price discovery. And then let’s get on opposite sides of that bet. And let’s just test out those beliefs.”

I think it’s just a particular mindset, and they become somewhat detached from whether that’s zero-sum or not. Now, I think that you may know that there’s actually quite a bit of crossover between people who are trading equities and poker players. There’s lots and lots of poker players who have become options traders, for example, or people who are trading financial instruments. There’s people who go the other direction, who are in finance who then transitioned to poker.

I think it’s because the minds work really similarly. So, I’m sure that what happened was somebody read something about shark migration patterns, said it out loud to a bunch of people who play poker, and immediately they started making a market in the same way that my brother and my brother-in-law did. It’s fun.

COWEN: If gamblers cultivate detachment to be better at gambling and not so emotional about it, does that mean when they win, they’re not that happy? How does a gambler stay happy and stay rational at the same time? Isn’t there a tradeoff?

DUKE: Hmmm.

COWEN: If you enjoy risk for its own sake, you’ll go broke. But if you don’t enjoy risk for its own sake, what are you doing playing these zero-sum games?

DUKE: The thing about poker that I think is really interesting is that it actually is a very small group who actually figure out a way to be happy. And I think it has to do with what exactly is it that you’re trying to get out of the game? So I think that the people who find a way to be really happy are the ones who are really interested in trying to figure out how to solve the problem of making decisions under that kind of extreme uncertainty.

And how are you actually figuring out — given the environment that you’re in and the information that you have — how do I build a really good model of my opponent? How do I figure out, given my model of my opponent, what the appropriate line is to play. You become somewhat, in that case, indifferent to the win or the loss, and it’s really about the game itself and solving the problem of the game.

But I think that that’s actually a relatively small handful of people who are playing poker. One of the things that’s hard about poker is that it’s one of the only places where you’re actually — I’m looking at you and putting my hand out when we have a transaction that you’re on the wrong end of, and you have to actually put that money in my hand, face-to-face in person.

And not only that, but in order for poker to really be fun, in general, people have to be playing for an amount of money that matters to them. So by definition, when you lose, you’re having to lose in this very personal way where you’re actually handing the money to me directly. And it’s by definition an amount of money that really matters to you. And I think that that can actually make people pretty sad.

And if you’re sitting at a poker table, you’re like, “Oh yeah, loss aversion is definitely, yes.” You just see these examples of it all the time, where there’s this huge asymmetry between how sad people are when they lose versus how happy they are when they win. It’s one of those things that, unless you’re really focused on process, and I think this is a lesson for all of life, right? The way to happiness is to focus on process.

Then the winning becomes secondary to that. It becomes a way to keep score on how you’re doing on the process piece. And to really focus on that as opposed to focusing on the end result, which is, what does the chip exchange look like at the end of the day? If you can’t do that, I think that you’re just not going to be happy playing the game, frankly.

COWEN: What made you most happy about poker? Other than just winning, of course, but the process.

DUKE: [laughs] Yeah. There’s a few things that made me really happy when I was playing. One thing is, I had come out of this PhD program in cognitive science where I was really studying learning, and poker is just a different way to study that topic.

That’s really, really powerful as a laboratory for thinking about human decision-making, not just about the way that other people make decisions, but it really exposes you to the way that you’re thinking, and in a real way, how hard it is to avoid decision traps, even when you’re perfectly well aware that those decision traps exist. And how easy it is for your mind to slip into those traps.

As an example, I went into that environment, knowing full well about self-serving bias, that we tend to attribute good things to our own skill, and we tend to attribute bad things that happen to us to luck. And I knew that that thing existed. I had studied it. And yet when I was at the table, it’s so easy to convince yourself that you’ve lost because of bad luck and you’ve won because you made great decisions. And you’re just sort of rinsing and repeating.

So, one of the things that I really loved about the game was the way it exposed that to yourself in a way that you . . . In a lot of ways, it was hard to hide from because if you weren’t seeing that clearly, you were going to lose. So not only did it expose that, but then you had to start to figure out, “Okay, so how can I at least reduce the impact of that?” Which was an ongoing self-discovery process of trying to figure out how to reduce the impact of cognitive bias. That was really interesting.

The other thing that I really, really loved about the game was that it happens to be one of those games that reveals itself to you as you go along. What you think the game is and what you think you know about it on the first day that you play is really different than what the game has revealed to you by a year in. And even 10 years in, it’s totally revealing new things to you.

So it just doesn’t get stale. It’s this constant process of learning and discovery and trying to understand this really, really, really complex system. And how do I actually get myself into a position where I can actually win despite the uncertainty and despite my own frailties of mind?

COWEN: Do you think very good poker players make better decisions than average in the other parts of their lives? Is there a transfer of learning or are they just sort of unhappy train wrecks?

DUKE: [laughs] My intuition is that it depends. Again, I think that there’s this handful of players who are very process driven, and for those players, it does indeed transfer. It’s just so easy for me to recall examples of people where there was literally no transfer — the number of people where you were definitely not seeing it translate into their personal life.

Just as a really simple example, you could see someone who was a really, really, really good poker player and they’d be really crushing it at the table. Then the next minute, they’d be out in the casino — which is obviously negative expectancy — just dumping a bunch of money at the craps table or the baccarat table. And it would be very confusing. What was happening there? Why were you so good in this one domain, and then suddenly, you were making these really terrible decisions in this other domain?

So, I do think that one of the things that poker teaches you is that you shouldn’t assume that just because people are really skillful in one domain that that’s going to transfer. Because I think that that ability can be very, very domain-specific.

COWEN: When you play poker with your brother and sister, how much does the actual course of play reflect real life family dynamics? They’re also famous poker players, right?

DUKE: No, my sister is actually — she’s a writer.

COWEN: But you’re a writer, too.

DUKE: But she does play a little bit of poker. That’s interesting. How much do they . . . Actually, I think quite a bit, to tell you the truth. [laughs] There’s quite a bit of psychodrama. My sister is quite a bit younger than me and my brother, and I think that that definitely expresses itself at poker. Just in the way that she plays, I think that that dynamic of younger sister comes into play.

Then I’m actually younger sister to my brother, When I was growing up, we used to actually play a lot of cards with my father, and I kind of idolized the way that they played, my dad and my brother. But then I would also get very mad when I’d lose to them. And I would say that that definitely translates as well.

COWEN: Your father does. Do you have a favorite malapropism or pun? Or is that not for you?

DUKE: Oh my gosh, no. That is definitely my dad’s domain. I think that, in some ways, I might’ve been scarred by all the punning that was happening in the household. [laughs] So I’m going to leave that with my father. That being said, I will recommend to everybody that if you haven’t read Anguished English, it’s a really hilarious book.

On a linguistics debate with Steven Pinker

COWEN: Your best-known academic article on why children learn nouns more efficiently than they do verbs.

DUKE: That’s true.

COWEN: In a nutshell, why is that?

DUKE: Okay, oh my gosh.

COWEN: Before you left psycholinguistics, right?

DUKE: Yeah. Let me, first of all, give a shout out to Lila Gleitman who was my advisor. She’s 90. I actually just talked to her the other day, and she’s an amazing, amazing intellectual.

But all right, how wonky do you want me to get? That’s the question.

COWEN: As wonky as you wish to.

DUKE: Back when I was in graduate school, there were competing theories. Just as a fun fact, the person who was on the other side of the argument was Steven Pinker, who I’m sure that everybody is familiar with. Essentially Steven Pinker was — and it’s not as dichotomous anymore, but at the time, people felt like it was either one thing or the other — what Pinker was arguing was that the way that children learn language is they learn what a bunch of words mean.

Then from the words that they learn, they then can bootstrap the syntax, the grammar of the language. German has a different grammatical structure than English does, which has a different grammatical structure than, say, Chinese. So the question was, how do you figure out the grammar? And he was positive that you do it from learning the meanings of some words, and then you work backwards to the grammar. That was called semantic bootstrapping.

My advisor was on the other side of that argument, which was that, actually, you learn the syntax of the language, and then that allows you to bootstrap the meaning of the word. That would be syntactic bootstrapping. Some of the evidence for that would be when there are a lot of cases where kids wouldn’t have any input of a fluent grammatical language, and they invent their own grammar that’s totally grammatical within what’s possible within human grammars, even though they hadn’t any grammar inputted to them.

The two examples of that would be, there was a trend back in the ’70s to not allow kids who couldn’t hear to actually learn American Sign Language. They were being forced to lipread. Those children invented their own sign language, and it looked very much like a regular, natural language.

Another example would be, there are pidgin languages where two groups come together who speak different languages. The adults have to communicate with each other. They basically communicate like, “Tyler, you, bottle, take.” It’s not really grammatical. But the children of those speakers create what’s called a creole. And that is actually a fully grammatical language that fits in with the rules of natural language.

So the idea is that we’re born with the syntax, and then you use the syntax to figure out the words. So the study that you’re talking about — we basically said, all right, let’s figure it out. And what we found was that some pretty simple nouns, like dog, you can actually pick up from your environment without the syntax.

But nouns that are not about concrete things out in the world — like dog — you actually can’t really get. So a noun like thought would be hard. What is thought? How can you see that? You can’t point to it, but you can point to dog and people will figure out what dog means, but verbs actually are hard too unless you actually have the grammar to support it.

So it turns out, kind of, everybody was right, that the idea is that you learn a few basic nouns, like dog. That helps you then figure out something about the grammar that you happen to be born into. And then once you have that grammatical structure, it allows you to start bootstrapping very quickly all the other words. That was really wonky, but you asked.

COWEN: When you beat people at poker, to what extent are you winning because you read their language better because you’ve studied psycholinguistics?

DUKE: Pretty much not at all. Mostly what you’re doing when you’re playing poker is that you’re really just trying to build a model of your opponent. And most of what you’re building has to do with things like what’s the frequency with which they enter pots? When they do enter a pot, in general, over time, you start to figure out what’s the range of hands that they would be playing in different positions for them. What’s a playable hand? So that you can throw out some possibilities and start to narrow down those ranges —

COWEN: Do they all have perfect poker faces? Forgive the use of the expression. You can’t look at them and feel, “Well, I think this person’s bluffing.”

DUKE: No, they definitely don’t have perfect poker faces. Let me put it this way. Most of the time in poker, the market’s really wide. Just let me figure out how to explain this. Okay, tells — things like let me look at your eyes and see what you’re doing — people definitely show them, but it’s not necessarily the most reliable information, particularly because, in order to pick the tell up, you have to be staring at the human being and human beings in general don’t like to be stared at, so —

COWEN: Who cares what they like? They’re opponents. They don’t like to be beaten, either.

DUKE: Right. Except that the problem is that, really, what you’re picking up — when people are bluffing, they’re uncomfortable. So when you’re seeing these physical tells from them, what you’re seeing is signs of discomfort. But if you stare at somebody too long, they’ll be uncomfortable.

So, sometimes when you see some of these things, you’re not exactly sure — is it they’re just uncomfortable because I’m staring at them? Or are they uncomfortable because, say, they’re bluffing and they’re not comfortable that they’re bluffing? That’s all I’m saying, is there’s noise in poker tells, so —

COWEN: But if you’re right 51 percent of the time, that’s significant.

DUKE: Right. That’s exactly right. The reason when you would use tells is when the decision is very close. You would use tells as a way to tip you from one side or the other. What I mean by that is . . .

Let’s say that a situation comes up where the pod is laying you three to one. If the pod’s laying you three to one, you only have to win the hand 25 percent of the time, and that’s actually a relatively low bar. If I’m playing only against one other person, the chances that I’m going to win over 25 percent of the time are pretty good. I don’t actually have to think too hard in that situation about whether I should play that hand.

But sometimes you get into a situation where I have to win the pot 25 percent of the time, and that’s actually right around where my market is sitting. I’m like, “Eh, that’s pretty close.” Then, tells can come in handy because they’re extra information that can allow you to tip over onto one side or the other of your decision.

COWEN: Can you read men better or women better?

DUKE: In general, I would say that I can probably read men better. And my understanding is that that’s also true of men, that the data is that men can read men better than they can read women, and women can also read men better than they can read women. I’m not totally sure about the second part, but I’m pretty sure about the first part, that men have an easier time reading men than they do women. The other thing —

COWEN: What’s wrong with us? What’s wrong with we men? Are we too vain? Are we boastful? Are we too sloppy with our countenances?

DUKE: In my case, it could be that only 3 percent of people who play poker at the level that I was playing are women, so I just have a lot more experience reading men. [laughs] That could be what it was. That’s possible. It’s been so long since I’ve read that literature, but I think that men more reliably show that information, but I feel like it’s been so long since I read that literature, I don’t know that I have anything that would be valid to say about it.

COWEN: Let’s try some rapid-fire questions with quick answers. First one, New Hampshire or Vermont?

DUKE: Oh, New Hampshire. I grew up in New Hampshire. I have to be loyal.

COWEN: But Vermont is prettier. Why is New Hampshire better?

DUKE: Because I grew up there. I have to be loyal to my home state. Also, I’d just like to say, Lake Winnipesaukee is pretty awesomely beautiful.

COWEN: Contract bridge or blackjack?

DUKE: Oh, for me, contract bridge.

COWEN: Why?

DUKE: I think that blackjack is kind of boring. It’s very rote. If you’re not actually counting the cards, you’re really just playing basic strategy, which means that there aren’t really a lot of decisions that are to be made that wouldn’t be premade. It’s not a fluid game where you’re having to adjust to what’s happening around you. You could walk into the casino, and someone can hand you a little card, and you could follow that card, which isn’t very fair.

Then if you’re counting, the cards — just more complex, but it’s still very rote. With bridge, it’s like . . . Gosh, bridge is so amazing. It’s like, how are you thinking about the way that you’re playing your cards in order to figure out where the king is sitting, or the ace is sitting? Ohh, I love that game.

COWEN: Options or futures?

DUKE: Well, for me, options just because I think I understand them better. I’ll go with what I understand more.

COWEN: What’s the best song by Nirvana?

DUKE: I want to say just “Smells Like Teen Spirit.” It seems so cliché, but it’s just such a great song. But I just love . . . You know the MTV Unplugged that Nirvana did?

COWEN: Of course.

DUKE: Can I just pick that whole album? It’s acoustic. Kurt Cobain’s just singing. I’m just going to take that whole album and say that version of all of those songs is so incredible.

COWEN: I think “Aneurysm” would be my single song pick.

Is Joan Rivers funny?

DUKE: I think that her act was funny.

COWEN: In 2009, you were on Celebrity Apprentice with Joan Rivers, and Donald Trump picked Joan Rivers over you. What’s your model for how that happened? Because I would pick you.

DUKE: She’s more famous than I am, and it was called Celebrity Apprentice. It was funny because I had a bunch of people after that say to me, “Well, that was really unfair.” And they started ticking off all the supposed rules of the game, like, “You raised more money. You won more challenges.” As if that was the game that I was playing.

And prior, when I had gotten in a heads-up situation with her when we were the final two, there’s a lag between when the show ends and when the winner gets picked, and I was letting people know, “Oh, just so you know, I’m going to lose.” And they were like, “No, you’re not.” And they would tick off all these reasons that I was going to win.

And I said, “But that’s not the rules of the game. It’s Celebrity Apprentice. Donald Trump picks. He’s been friends with Joan Rivers forever, and she’s more famous than me. I literally have no shot. And no matter what you think the rules are, those really aren’t the rules because it’s reality TV, so he’s going to figure out a way to pick her.” I was pretty clear about that. Actually, I wasn’t particularly upset by it because I understood that that was the game that I was sitting in. I was upset by other things, but not by that.

COWEN: I don’t intend this as a political question, but what was Donald Trump like?

DUKE: Basically, probably, whatever your viewpoint of him is now would be very true to what he was like in person.

COWEN: Does he have tells?

DUKE: Oh, for sure. Yeah, absolutely.

COWEN: So you think one can just read him flat out in obvious ways?

DUKE: In some obvious ways, yes. Some tells are very, very easy to read and reliable. I was talking about some of the more subtle tells once you get to the expert level of poker, but as an example, there’s a very reliable tell when people are new to poker that I would use every single time. It would actually move my market by a lot if you did this.

As an example, there’s something when people are new to poker, which is “Strong means weak, and weak and strong.” When a player puffs themselves up and takes their chip to bat, and they grab their chips and it’s a big motion, and they very forcefully put those chips into the pot, if it’s a new player, they’re almost always bluffing in that situation. But if they take their chips, and they’re as gentle as a mouse, they’re like, “Ooh, look, I’m betting. Don’t pay any attention to me. I’m just going to quietly slide my chips into the pot,” usually means that they’re very strong.

DUKE: Now, that particular tell goes away pretty quickly. When I was saying it’s very hard for tells to really move your market a lot, I was talking about expert players. But if you’re talking about a beginning player, tells can actually make your market. They can really tell you something incredibly significant. So yeah. I feel like he’s got some pretty strong tells.

On how poker player would think about public policy

COWEN: If only poker players voted, how would policies change? How would the country be different? It’s not a question about party affiliation, but about how poker players think because your reason for why you vote is going to matter more than which party you vote for if you’re the only voters.

DUKE: I need to understand what you mean by a poker player because there’s all sorts of different types of people who play poker. Do you mean —

COWEN: The top 500 poker players. You all vote. How does the country change?

DUKE: I think that —

COWEN: What decisions do we make better? Because you’ve already said these people are not necessarily better at happiness. They don’t necessarily transfer the learning. Would it just be the exact same country? Would we somehow take more clever risks in foreign policy? Would we read the tells of Putin and other foreign leaders?

DUKE: My suspicion is that if only the top 500 poker players voted, people would be thinking a lot more about edge cases — where things could go wrong, for sure, because poker players just are obsessed with that. I think that there would be more long-termism as opposed to short-termism, again, because you have to be obsessed with that as a concept. I think that people would be thinking about “What are the unintended consequences? How does this look?”

Another thing that’s really important that poker players think about is, “If I put this policy in that looks like it’s awesome, how can someone come in and find the cracks in it so that it can turn into something bad?” I feel like the top 500 players would definitely be thinking in that way more.

Assuming that they wanted to use their powers for good as opposed to evil, which we’ll assume, I feel, in general, policies would be better, less easy to be advantaged, thinking more long-term, definitely more willing to take risks that were worthwhile. Yeah, I feel like things would be better.

COWEN: Let’s say the top 500 people in finance were the only voters. Putting aside policy toward finance, do you think it’s basically the same answer or somehow different?

DUKE: Well, again, with both groups, I’m assuming that they’re trying to do good and not do evil because, obviously, you can be thinking about any of this. Yes, I think that that is true as well.

COWEN: Why are there so many casino scenes in American Western movies and James Bond movies? Gambling scenes, baccarat, right?

DUKE: I feel like it’s a little similar to a lot of people playing the lottery. And also, what is the image of a gambler in America? First of all, I think that America likes to think of itself as really idolizing risk takers, so it shows James Bond is a risk taker, but he’s very smart. I think that a lot of it has an association of glamor with it, which is pretty hilarious if you’ve ever seen people at a poker table, but I think they think it’s glamorous.

Then also, I think that there’s just a certain amount of fantasy, like, “Maybe I could be in that position and I could win big.” Or “If I had enough money, I’d bet that amount of money.” There’s some wish fulfillment.

COWEN: Why has poker stayed culturally such an American game? If you go to Macau, poker is not nearly as big a thing as it would be in the United States. What’s the cultural barrier? Why is it not such a universal game?

DUKE: It’s so funny because I think about that. I think about poker as a pretty universal game because certainly when I was playing, you would be sitting at a table and there were people — Chinese, Vietnamese, Korean, German, French, Italian, Spanish, Russian. It really drew people from all over the world into the game, but I suppose, maybe, that it drew them into whatever the American version of the game, although there’s the European Poker Tour, and there is poker in Macau.

It’s an interesting question. I’ve always thought of it is very international, but if it’s not, obviously, I’m thinking from the inside view. I was living in poker, which seemed very multicultural when I was playing.

COWEN: If I went to a random get-together with Taiwanese men in a midsize Taiwanese city, I would be shocked if they were playing poker. Maybe it’s Mahjong— I’m not even sure, some other game with tiles, some other form of betting. Whereas in the United States, I wouldn’t be shocked by seeing poker anywhere.

DUKE: Yeah. I guess that’s true. Gosh, I’ve really never thought about this. I think that every culture has some form of gambling, and for whatever reason, poker became part of the lore of the Old West. It was a way that we gambled, but I don’t know. Can I ask you a quick . . . Are there people who — for example, Mahjong — are there people who make their living playing Mahjong? I don’t even know.

COWEN: I believe so. I’m not an expert in the matter, but yes, I think wherever there’s gambling, even with chess, people make their living from gambling and chess, and that’s an absurd gambling game because who’s ever better is evident very quickly, right?

DUKE: Right, which is why speed chess allows you to feel like you got unlucky. That’s why the real money is made in speed chess.

The other thing of course is that, I guess, in chess, you can negotiate. You start with two pawns fewer than I get, so you can try to negotiate what the tipping point is. Same in golf. I’m just going to have to say I don’t know there. It originated in France too, so I don’t know. That’s a really good question. Let’s call it a stumper.

On the cognitive styles and personalities of top poker players

COWEN: How smart are those top 500 poker players just as humans?

DUKE: Oh, they’re brilliant, most of them. Not all of them, but almost all of them are brilliant. And that doesn’t necessarily mean they’re incredibly well-read. Not all of them are. Not all of them would have a traditional education, but they’re all ridiculously smart. Not all, but most.

COWEN: Do you think they could have done other wonderful things and there’s some kind of potential social loss? Or being a poker player is the highest advocation, and they have some kind of strange personality asymmetry where, say, they wouldn’t have made a great CEO. They couldn’t have been an inventor, couldn’t have done this or that. And like chess players, they ended up as poker players. Or are they multifaceted, and it’s some kind of shame that they were not out there being great in some other role?

DUKE: I think that there’s certainly some significant portion of them that that’s true of, that they could be doing great things out in the world.

But I also think that there are quirks about people who are attracted to poker because, given how brilliant they are and particularly how brilliant they are at game theory and expressing that and instantiating that in a real-time, high-stakes decision-making problem, I think that most of the people who are playing poker could be making more money doing something else, could be creating more productivity for the world as you said, moving out of this zero-sum situation into something that’s more win-win.

But I think that there is something in general about who’s attracted and willing to take a haircut to go play poker, in order to do that, that has to do with a sense of independence and not necessarily fitting in with what the norms of society are.

There’s a very famous story about a poker player, a really good poker player, who decided that they wanted to actually try trading instead. So they got a job with a firm to go trade. And the first day, they didn’t show up, and they called in at, I think, 11 in the morning or something and said, “I’m sorry, I can’t take this job. It’s just too early.” [laughs] They just didn’t want to get up that early. So, they went back to playing poker. And I do feel like that encapsulates something about a certain group of poker players.

COWEN: You probably know the case of the famous economist, Steve Levitt. He decided he would become a top poker player. Within a fairly short period of time, he did. Do you think most very smart people could do that? Or are they, in turn, lacking something that these top 500 poker players have?

DUKE: I don’t think that most just generally very smart people could do it. Obviously —

COWEN: What stops them? What are they lacking?

DUKE: Well, first of all, I just want to take this moment to tell everybody to go get Maria Konnikova’s new book, The Biggest Bluff. Super smart, PhD in psychology, decided she was going to learn poker to try to understand uncertainty better and the influence of luck in your life and managed to become a champion. Her book is a really wonderful. It’s a memoir, but it’s also a real meditation on luck and uncertainty and its influence in your life and game theory. And it’s really an amazing book. It actually just came out on Tuesday.

No, just because you’re smart doesn’t mean that you can become a great player. I think that you have to be smart in a very particular way, and it would be the way that somebody like Steven Levitt is smart or Maria Konnikova is smart. I think that there’s a certain way —

COWEN: What is that way? I don’t have it, though I’ve never tried. What is the way? What am I lacking? All those like me who would fail?

DUKE: I don’t know that you would fail by the way. I think that if you have the ability to think probabilistically, I would say that that’s number one is that you really, really have to understand that —

COWEN: Seems like the easy part to me. That I can do.

DUKE: But see, that’s the thing. That one thing — I actually co-founded the Alliance for Decision Education partly because of that one thing. This thing that we take for granted, that has to do with thinking probabilistically, is not something that’s really taught in K through 12. It’s not the way that people are trained to think. You can see it all the time.

In 2016, Trump — I think he closed on 538, at something between 30 and 35 percent to win. And when he won, people were like, “They were wrong. That was ridiculous.” And this is how, generally, people think. So, that core thing of are you good at thinking probabilistically is a bigger thing than you think.

And then on top of that, you have to be somebody who’s really interested in understanding when the things you believe are inaccurate. And you have to be so incredibly hungry to collide with corrective information. You have to be openminded to the corrective information.

You have to be updating your beliefs constantly, and I think that you just have to be willing to have less endowment to your own beliefs and hold those really loosely because you have to keep this end goal in mind. I’m not trying to win this hand. I mean, I am, but I understand that there’s all sorts of things that might intervene in my ability to do that. I’m trying to win in the long run.

And the worst thing that I could find out is that I believed something was true and held onto that belief too long, so it affected my bottom line. You just have to be thinking that way all the time. And then you have to be willing to try to solve for it. If you have those things and you’re smart, I think that in a pretty quick period of time, you could become very good at that game.

COWEN: Let’s say you take a player who plays regularly at a local casino, does pretty well. Maybe he’s in the top 5 or 10 percent of that group and has played for 10 years. You put that person down at a table with a top-20, top-30 poker player. What’s the difference? What do the very top players have that that individual would not? How would they beat him?

DUKE: It’s such a combination of things. The way that I would think about it is if I took some really successful trading options in 1982, and I put them into the environment that exists now, where the market is super, super tight, I wouldn’t actually expect them to be able to win. And the reason is that when the markets are really wide, your ability to be leaving basis points on the table — you just have so much more room for not getting it just right, because the difference between you and the people that you’re trading against is so wide.

So yeah, could you be, if you were really concentrating and you were really working on getting better at modeling your opponent, really understanding bet size, understanding that you always want to be trying to get on the primary line of play as opposed to the secondary line of play, that gets forced on you as the markets tighten.

But that person who’s sitting in that game where they might be in the top 10 percent of their local casino — they can be choosing the secondary line of play a lot and still be crushing the game. Once you get against the people who are real experts, who have really come up the ranks, those people are — at just such a higher percent of the time — they’re choosing the primary line.

And when you’re butting up against that on the secondary line . . . You’re good. You’re coming up with a pretty good option, but you’re just not coming up with the best option enough.

Or you might be on the tertiary line. That might be okay if the market’s wide enough. And how you’re sort of figuring out what’s the right choice in any given time — it’s like so many things go into that. So you’re just going to butt up against ooh, that market just got really tight on you.

COWEN: Is playing poker different when you’re nine months pregnant?

DUKE: [laughs] Yes. You have to go to the bathroom a lot more, so you miss a lot more hands. The other thing is that, honestly, when you’re physically uncomfortable, it does affect the quality of your thinking. I truly believe when I was playing when I was nine months pregnant, I was certainly not playing as well as when I was not nine months pregnant, just because you’re super physically uncomfortable. And you’re also tired.

COWEN: Does alcohol affect high-level play in poker?

DUKE: Oh yes, a lot. It’s interesting — at the lower levels, if you have somebody who maybe isn’t aggressive enough in their play — they’re a little bit too passive at the lower levels — if you give them a beer, it would probably be helpful because it would get their courage up. And in poker, courage can get really rewarded. But again, the problem is that once those markets tighten and your opponents start to get a lot better, alcohol would not be advised. I would like it if my opponents were drinking.

COWEN: In the last 10 to 15 years, what’s the main thing we’ve learned from computers about playing poker that we didn’t know before?

DUKE: Actually, this is a place where I’m not the best person to answer. The reason is that I retired in 2012, and a lot of the stuff that’s been done in terms of simulations has actually occurred in that period since I retired. Now people have access . . . Like Maria Konnikova — a lot of the learning that she did was through being able to run these Monte Carlo simulations and try to figure out . . . Through being able to run those simulations, it’s a lot easier to figure out what the game theory optimal choice would be.

And those things, we were sort of trying to figure out by feel, or sometimes by hand. There’s just a whole bunch of really interesting plays that players are making now that I think that we, back in the day, when we were all doing it just ourselves, I don’t know that we would’ve been able to come to them because they’re not intuitive.

In the same way, I think that backgammon has changed a lot, too. The intuition about — for somebody prior to being able to run all these simulations — about how often you should be leaving a naked checker, a shot, you would have been trying to cover those a lot more back in the ’90s. But what the computer simulations have shown you is that you should actually be leaving those shots a lot more often than what your intuition might tell you.

And I think that there’s a lot of similar things in poker. But honestly, I can’t really give you specifics because a lot of those changes occurred after the point that I retired, which is really good for me, by the way, because I don’t know how I would have done in that environment. I’m not sure that at this point I’d be willing to put in the work. I think if I tried to play poker today, I would just get destroyed. [laughs] This is my opinion.

COWEN: My last question, if you meet a young person, maybe 18 or 20, and they tell you they want to become a top poker player, and they’re already quite good. Maybe you could imagine it. What signs do you look for in them to judge whether they really have the talent, temperament, whatever it takes? What do you look for?

DUKE: The number one thing, really honestly, is open-mindedness. I just think, in order to really succeed at the top levels of the game, you have to be so open minded. You have to be so willing to ponder on a daily basis the idea that you might be wrong, the idea that the things that you think to be true or what you think about an opponent — that it just might be inaccurate.

And if you’re not willing to ponder that, which I think is difficult — I mean, the human brain isn’t really built to just be constantly thinking, Where am I wrong? Where am I wrong? Where am I wrong? The human brain is built to go like, I’m right, I’m right, I’m right.

DUKE: And I think it’s kind of a hard thing to actually live, to actually put into practice. So that’s probably the number one thing that I would be looking for. Obviously, it would be, if they’re already successful, I already know they probably know the basics. They’re good with the math. They certainly must have a feel for the game and skill in the game. But then I would be looking at how eager are they to learn and learn in this particular way, which is just always thinking, what did I do wrong?

There’s a story about Phil Ivey that I think is so telling about what it takes to be a great player, where he won a really, really huge tournament. And then he went to dinner and during the dinner, all he talked about — he was just obsessed — all he talked about were the places where he felt like he didn’t bet enough, or he bet too little, or a hand he shouldn’t have played, or a hand he didn’t play and he should have, or the mistakes that he felt that he had made playing that final table.

This is someone who had just won a huge tournament, who, by all accounts at that time, was the best player in the world. And I think it’s so telling that that’s what he was talking about right afterwards, was just picking apart what are all the places where he was leaving equity on the table, where he wasn’t grabbing what was sitting in front of him, and trying to clean up around the edges of that and figure out all the mistakes that he made. And I don’t know that everybody is built for that.

COWEN: Annie Duke, thank you very much.

DUKE: Thank you.