In her book “The biggest bluff” the author Maria Konnikova describes betting as a “corrective for many of the follies of human reason”. This seems contradictory at first as betting is rarely considered a prudent activity either. It is, however, important to distinguish betting (in poker) from gambling. A game like roulette, for example, is based purely on luck. Poker, on the other hand, is a complex game that requires a mix of skills to be successful. Luck plays a role here as well, but as every amateur player who participates in a tournament can confirm, in the long run, the most experienced and skilled players win.
Leaving aside the question of whether betting is a “virtuous” endeavour or not, the point is that introducing a direct cost into our decision making changes how we evaluate a situation. When we make a decision, we are searching for possibilities and evidence. Are the things we believe actually true? The lower the stakes, the less we are inclined to make an effort to question our beliefs. If the costs are high, and in the case of betting in poker, if being wrong leads to an immediate loss, we are much more motivated to scrutinise our assumptions. “Would you bet your house on it?” changes what we claim to be true.
In other words: betting is an evidence amplifier.
We encounter a similar situation in software engineering. The cost of failure determines the stakes of developing software. Do we build a system for the space shuttle or an image sharing app? Will an error cost lives or cause a minor disturbance of a (freemium) user?
Shipping software into production is a bet. Knowing the stakes is a crucial ingredient when determining how much research, testing and rigour we want to invest. In other words, how much evidence we need to seek out before releasing software to the world. When we overestimate the stakes, we may unnecessarily hinder our velocity by over-thinking or over-engineering our solution instead of relying on a shorter release cycle that will lead to actual evidence that the feature works in production. The opposite, however, can be worse. Miscalculating the stakes can lead to underestimating the risk of how much damage shipping a faulty component can cause.