In an uncertain world, decision-making is a crucial aspect of our personal and professional lives. However, humans are prone to cognitive biases and often rely on intuition rather than probabilistic thinking. "Thinking in Bets" is a concept popularized by Annie Duke, a professional poker player, which involves making decisions by thinking in probabilities rather than certainties. This paper explores the concept of Thinking in Bets, its application in decision-making, and its relevance to uncertainty and probabilistic thinking. We also provide a GitHub repository with Python code examples to illustrate the concepts discussed in the paper.
def evaluate_bet(probability, payoff, risk_free_rate): """ Evaluate a bet by calculating its expected value.
Returns: float: Expected value of the bet. """ expected_value = probability * payoff - (1 - probability) * risk_free_rate return expected_value
