How to Decide

1. Recognize and overcome resulting bias to improve decision-making

There are only two things that determine how your life turns out: luck and the quality of your decisions. You have control over only one of those two things.

Resulting bias is the tendency to judge a decision based on its outcome rather than the decision-making process itself. This bias can lead to poor learning and future decision-making. To overcome resulting:

• Separate decision quality from outcome quality
• Consider alternative outcomes that could have occurred
• Evaluate decisions based on the information available at the time
• Recognize the role of luck in outcomes

By focusing on the decision-making process rather than just the results, you can improve your ability to make better choices in the future.

2. Combat hindsight bias by tracking knowledge before and after outcomes

Memory creep is the reconstruction of your memory of what you knew that hindsight bias creates.

Hindsight bias distorts our perception of past events, making them seem more predictable than they actually were. To combat this bias:

• Use a Knowledge Tracker to record what you knew before and after a decision
• Distinguish between information available at the time of decision and information revealed later
• Practice identifying instances of hindsight bias in everyday life
• Cultivate empathy for past decision-makers, including yourself

By accurately tracking knowledge and recognizing the limitations of foresight, you can learn more effectively from past experiences and make better decisions in the future.

3. Explore the decision multiverse to understand all possible outcomes

There are more possible futures than the one that actually happens.

The decision multiverse is a mental model that encourages considering all potential outcomes of a decision, not just the one that occurred. To implement this approach:

• Construct simplified decision trees to visualize potential outcomes
• Practice counterfactual thinking by imagining "what if" scenarios
• Evaluate both positive and negative potential outcomes
• Use this perspective to better understand the role of luck in results

By exploring the full range of possible outcomes, you can make more informed decisions and avoid overemphasizing singular results.

4. Use the Three Ps: Preferences, Payoffs, and Probabilities to evaluate decisions

Assessing the quality of a decision involves figuring out whether going for the upside is worth risking the downside.

The Three Ps framework provides a structured approach to decision-making:

1. Preferences: Identify your goals and values
2. Payoffs: Evaluate potential gains and losses
3. Probabilities: Estimate the likelihood of each outcome

To implement this framework:

• Create decision trees that include all three elements
• Practice estimating probabilities, even with limited information
• Consider both short-term and long-term payoffs
• Align decisions with your personal preferences and values

By systematically considering these three factors, you can make more balanced and well-reasoned decisions.

5. Embrace precision in forecasting to make better choices

The bigger the asymmetry between the upside and downside, the more you have to gain when potential losses are limited, and the bigger the freeroll.

Precise forecasting improves decision-making by forcing you to clarify your thoughts and assumptions. To increase precision:

• Convert vague terms (e.g., "likely") into specific probabilities
• Use ranges to express uncertainty in estimates
• Practice the "shock test" to calibrate your confidence
• Seek out information that could change your estimates

By embracing precision, you can:

• Identify areas of uncertainty
• Communicate more clearly with others
• Make more accurate comparisons between options
• Improve your calibration over time

6. Combine inside and outside views for more accurate decision-making

Accuracy lives in the intersection between the outside view and the inside view.

The inside view is based on your personal experiences and beliefs, while the outside view considers broader data and perspectives. To combine these views:

• Start with base rates and general statistics (outside view)
• Adjust based on specific circumstances (inside view)
• Use Perspective Tracking to separate and then integrate both views
• Seek diverse opinions to challenge your assumptions

Benefits of this approach include:

• Reduced overconfidence
• More balanced assessments
• Improved ability to spot personal biases
• Better integration of personal knowledge and external data

7. Break free from analysis paralysis by identifying low-impact decisions

When a decision is hard, that means it's easy.

To overcome analysis paralysis and make decisions more efficiently:

1. Use the Happiness Test: Ask if the outcome will significantly affect your happiness in a week, month, or year
2. Identify repeating options that allow for future adjustments
3. Recognize freerolls with limited downside and potentially high upside
4. Apply the Only-Option Test for decisions between similar choices

Strategies for faster decision-making:

• Use the Menu Strategy: Focus on sorting options, not picking between good choices
• Practice quit-to-itiveness: Be willing to change course when necessary
• Consider parallel options to gather more information

By identifying which decisions truly matter, you can allocate your time and mental energy more effectively.

8. Harness the power of negative thinking to achieve goals

Mental pain leads to real-world gains.

Negative thinking, when applied strategically, can improve goal achievement. Techniques include:

1. Mental Contrasting: Imagine obstacles to success
2. Premortems: Envision potential failures and their causes
3. Backcasting: Work backward from imagined success
4. The Dr. Evil Game: Identify subtle ways you might sabotage yourself

Benefits of strategic negative thinking:

• Better preparation for potential challenges
• Increased motivation to take preventive action
• More realistic goal-setting and planning
• Improved ability to identify and address weaknesses

By embracing controlled negative thinking, you can paradoxically increase your chances of positive outcomes.

9. Practice decision hygiene to elicit unbiased feedback

Beliefs are contagious.

Decision hygiene involves creating an environment that minimizes the spread of biased information. To practice good decision hygiene:

• Quarantine your opinions when seeking feedback
• Frame questions neutrally to avoid signaling preferences
• Solicit independent feedback before group discussions
• Anonymize feedback in group settings to reduce status effects
• Create checklists of relevant information to provide when seeking advice

Benefits of decision hygiene:

• More diverse and honest feedback
• Reduced groupthink in team settings
• Better access to others' true opinions and knowledge
• Improved ability to spot areas of disagreement or uncertainty

By creating a "clean room" for decision-making, you can gather more accurate information and make better-informed choices.

Last updated: September 4, 2024