In a recent podcast, we talked with professional poker player Annie Duke about thinking in probabilities, something good poker players do all the time. At the poker table or in life, it’s really useful to think in probabilities versus absolutes based on all the information you have available to you. You can improve your decisions and get better outcomes. Probabilistic thinking leads you to ask yourself, how confident am I in this prediction? What information would impact this confidence?
Bayes’ Theorem
Bayes’ theorem is an accessible way of integrating probability thinking into our lives. Thomas Bayes was an English minister in the 18th century, whose most famous work, “An Essay toward Solving a Problem in the Doctrine of Chances,” was brought to the attention of the Royal Society in 1763—two years after his death—by his friend Richard Price. The essay did not contain the theorem as we now know it, but had the seeds of the idea. It looked at how we should adjust our estimates of probabilities when we encounter new data that influence a situation. Later development by French scholar Pierre-Simon Laplace and others helped codify the theorem and develop it into a useful tool for thinking.
Knowing the exact math of probability calculations is not the key to understanding Bayesian thinking. More critical is your ability and desire to assign probabilities of truth and accuracy to anything you think you know, and then being willing to update those probabilities when new information comes in.
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