Good quality decisions do not always yield good outcomes
All decision makings in real life are made under uncertainty. All decisions are essentially bets about the future
Decisions made in Chess are not made under uncertainty because every single permutation can be pre-computed unlike Poker.
Most real life decisions are not zero-sum games
On outcomes
Real life outcomes are probabilistic
Outcomes are influenced primarily by the quality of our decision (skill) and luck
While the outcomes might not always be positive, having a process in place to constantly improve the quality of decision making will tilt the odds in our favor
Implications
Do not change strategy drastically just because a few hands did not turn out well in the short run
For each premise understand what the base rate is
Learn to be at peace with not knowing
Recognize the limits of our own knowledge
A great decision is a result of a good process. A good process attempts to accurately represent our own state of knowledge
Watching: It is free to learn from other people’s experience
Cognitive biases that impede good decision
Decisions are the outcomes of our beliefs
Hindsight bias impedes against quality decision making
Guard against black or white decision making
Availability bias means lagging any prior conflicting data, our default setting is to believe what we hear is true
Selective bias and consistency bias, means we are unwilling to change our mind despite contrary signals from the environment
Avoid attribution bias
Related Readings
Theory of Games and Economic Behavior, Jon Von Neumann
Ignorance: How it drives Science, Stuart Firestein
