How to Decide

The thing about the past is that you can’t change it. What you can do is apply what you learn from the past to all the new decisions you have yet to make by developing a repeatable process for better decision-making.

For past decisions, you’re reconstructing the decision while navigating your way through distortion-inducing biases. For new decisions, you’re looking into the future, which is inherently uncertain.

It is not that an outcome is never informative. It is that it is informative only when the outcome is unexpected, when you didn’t anticipate the result in the set of possibilities.

your decisions will only be as good as your ability to anticipate how they might turn out.

SIX STEPS TO BETTER DECISION-MAKING Step 1—Identify the reasonable set of possible outcomes. Step 2—Identify your preference using the payoff for each outcome—to what degree do you like or dislike each outcome, given your values? Step 3—Estimate the likelihood of each outcome unfolding. Step 4—Assess the relative likelihood of outcomes you like and dislike for the option under consideration. Step 5—Repeat Steps 1–4 for other options under consideration. Step 6—Compare the options to one another.

Advice can be an excellent decision tool as long as you are explicit about your goals and values when you are seeking that advice. Otherwise, you run the risk that the person whose advice you are seeking will assume you share their preferences and will answer accordingly.

Most decisions have a mix of upside and downside potentials. When figuring out whether a decision is good or bad, you are essentially asking if the upside potential compensates for the risk of the downside.

limitations of pros and cons lists. The good news about a pros and cons list is that it at least gets you thinking about the upside (the pros) and the downside (the cons), the start of Step 2. The bad news is that a pros and cons list doesn’t get you thinking about magnitude, how big a positive any pro is or how big a negative any con is,

Every time you get in a car, you’re risking a big downside: getting in an accident and dying. Of course, you take that risk because the probability is so small that the upside (time saved, increased productivity, etc.) compensates for it.

To figure out whether a decision is good or bad, you need to know not just the things that might reasonably happen and what could be gained or lost, but also the likelihood of each possibility unfolding. That means, to become a better decision-maker, you need to be willing to estimate those probabilities.

When you guess, the gap between perfect knowledge and your knowledge bothers you.

If there’s a right answer out there and you don’t know it, guessing feels bad.

and “wrong” and nothing in between, is one of the biggest obstacles to good decision-making. Because good decision-making requires a willingness to guess.

This way of thinking, that there is only “right” and “wrong” and nothing in between, is one of the biggest obstacles to good decision-making. Because good decision-making requires a willingness to guess.

We get hung up on not having all the information, which causes us to overlook all the things we do know.

All your knowledge, imperfect as it might be, means that your guess isn’t random.

All your knowledge, imperfect as it might be, means that your guess isn’t random. Although you don’t have perfect information, you have a lot more than no information

You might not get it perfect, but when it comes to decision

Don’t overlook the territory in between right and wrong. Don’t overlook the value in being a little less wrong or a little closer to right.

your job as a decision-maker is to figure out two things: (1) What do I already know that will make my guess more educated? (2) What can I find out that will make my guess more educated?