How to Decide | Annie Duke

Summary of: How to Decide: Simple Tools for Making Better Choices
By: Annie Duke

Introduction

Embark on a journey to refine your decision-making skills with ‘How to Decide: Simple Tools for Making Better Choices’ by Annie Duke. This book teaches you to break away from the trap of using the quality of results to assess the quality of a decision. Learn about the fallacies of hindsight bias and resulting, understand the difference between a good outcome and a good decision, and unlock valuable techniques to overcome biases. Discover the six-step method to improve your decision-making process, identify low-impact decisions, and embrace the power of negative thinking.

The Misguided Assessment of Decisional Quality

When assessing the quality of a decision, we often rely on its outcome rather than considering the decision-making process. This resulting bias can lead to flawed decisions and hinder personal growth. Resulting ignores the role of luck and can lead to repeating the same errors, compromising our compassion for others, and blaming ourselves when outcomes don’t go as expected. The key to making better decisions is to eliminate our dependence on resulting and shift our focus to evaluating the decision-making process.

Avoiding Hindsight Bias

How can we make better-decisions in the future? According to research, hindsight bias often distorts our perception of decisions and makes us believe in a predetermined outcome. Instead of relying on this bias, we must use a simple tool called a knowledge tracker to reduce it. Before finalizing the decision, we should make a list of the knowledge and beliefs that contributed to it. After the outcome, we should write down all the new information that we received, including what we learned from the outcome. By comparing our before-and-after knowledge, we can recognize what information we missed and how much the outcome was because of our decision. This way, we can learn from our mistakes and make better-informed decisions in the future.

Learning from Past Decisions

The key to learning from our past decisions is to accumulate data from multiple decisions before making any assessment. The quality of our data is limited when we consider a decision as a single solitary phenomenon with a single predetermined outcome, giving us a sample size of only one. We need to examine multiple decisions and the multiple results they can lead to. To have more data, we can use our imaginations to think of other plausible what-if scenarios. Visualizing potential hypothetical outcomes is known in psychology as counterfactual thinking. It’s a valuable tool for learning from our experiences and comparing possible outcomes to the outcome we got. By accumulating information from various decisions, we can effectively hone our decision-making skills and make better choices in the future.

Making Informed Decisions

Imagine receiving a job offer for your dream job, but it’s located in a place you despise. You’re torn between staying in the place you love or taking the job. This book outlines a six-step method to help you make more informed decisions and reduce bias. The process involves choosing a consideration, identifying positive and negative outcomes, evaluating probability, comparing options, and making a final decision based on preferences, payoffs, and probabilities. By using accurate information, we can increase our chances of making the right choice, even when it seems daunting.

Precise Terms of Probability

Have you ever received vague expressions of probability like “more likely than not” or “certainly”? The truth is, these phrases are open to interpretation and could lead to different levels of certainty. The solution is to convert these probabilities into numbers, percentages, or ranges to contextualize your level of certainty. In high-risk professions like tax attorneys, numerical equivalents have been agreed upon for specific phrases to ensure transparency and avoid ambiguities. By expressing uncertainty as a numerical range, you establish upper and lower constraints, which help elicit feedback and find gaps in your information. This range should be narrow enough to be helpful, but wide enough so that anything outside of it would truly be a shock. So, stop using vague terms and start using precise terms of probability to increase transparency and invite others to help increase your certainty.

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