Quotes About Decision-making

Now for the bad news: Being smart doesn't make you less susceptible to the inside view. If anything, it makes it worse. It straps your beliefs into the driver's seat more firmly. Research across a variety of settings has shown that being smart makes you better at motivated reasoning, the tendency to reason about information to confirm your prior beliefs and arrive at the conclusion you desire.

When we think probabilistically, we are less likely to use adverse results alone as proof that we made a decision error, because we recognize the possibility that the decision might have been good but luck and/ or incomplete information (and a sample size of one) intervened.

the pass-fail nature of goals, their inflexibility, and how pursuing them leads to ignoring other opportunities that might be available.

Of course, the world is uncertain and the world does change. That means that our goals ought to change in response. But the goals we set are remarkably unresponsive to new information.

Our track to nowhere could be refusing to quit our college major even though it's making us unhappy, because we already took so many classes and put so much time into it.

Seek out the outside view with an open mind. You'll be more likely to find out about the KICK ME sign on your back, the spinach in your teeth, and all the things you're having trouble seeing from your perspective. That will help you clear out the junk, which will improve your decisions.

To make these unlesses most effective, we need to create strong precommitment contracts that set out how we're going to follow through on those kill criteria. Then, to make sure that we're picking the unlesses that are going to get us to the fastest answer about whether the thing we're doing is worth pursuing, we need to do the work of identifying monkeys and pedestals.

There is a rich universe of science studying the human tendency to persevere too long, particularly in the face of bad news.

Unlesses can get us out from under the forces that will keep us playing in the short run, chasing a win, and align our behavior more closely with our long-term best interests.

When it comes to the bad stuff, the inside view tends to lead you to blame luck rather than your own decision-making. After all, luck is the easiest escape hatch for keeping your self-narrative intact. But identifying luck as the primary culprit for your situation won't help you much in addressing the situation.

A negative outcome could be a signal to go in and examine our decision-making. That outcome could also be due to bad luck, unrelated to our decision, in which case treating that outcome as a signal to change future decisions would be a mistake.

We would be better served as communicators and decision-makers if we thought less about whether we are confident in our beliefs and more about how confident we are. Instead of thinking of confidence as all-or-nothing (" I'm confident" or "I'm not confident"), our expression of our confidence would then capture all the shades of grey in between.

But just because there are a lot of benefits to setting goals doesn't mean that there isn't a downside to them as well. As you might already suspect, clearly defined finish lines should come with a warning: Danger, you may experience escalation of commitment.

victim of our tendency to equate the quality of a decision with the quality of its outcome.

The endowment effect has obvious applications to quitting behavior. Selling something you own is the equivalent of quitting; you are quitting your ownership. Not selling something you own is a form of persistence. When you are deciding whether to sell your wine, or your car, or your house, you are choosing whether or not to persist in owning those things.

When possible, divide and conquer. Have the people who make the decisions to start things be different from the people who make the decisions to stop those things. For clients of mine who are institutional investors, I have suggested that type of strategy as a way to improve their sell-side decisions. Have the committee approving what to buy be different from the committee approving what and when to sell.

When we're choosing among new options, loss aversion causes us to favor the ones that have the lowest absolute loss associated with them, even if those options come at a lower expected value. In other words, our aversion to taking a loss causes us to make decisions a rational actor would not.

The result is that we'll quit when we're ahead, even if we're giving up good opportunities to win more. If we're behind, we don't want to quit, even if persisting—to try to get to the other side of zero—is more likely to make things worse.

Deciding which hands are worth playing and which hands are not is the first and most consequential choice a player makes. And pros are just better at that choice, playing a mere 15% to 25% of the two-card starting combinations they are dealt in Texas Hold'em. Compare that to an amateur, who will stick with their starting cards over half the time. In the battle of whether to hold 'em or fold 'em, amateurs usually hold 'em. Professionals usually fold 'em.

In order to become a better decision-maker, it's imperative to actively explore all four of the ways that decision quality and outcome quality relate to each other.

might have been absurd, but I was making the point that a necessary part of succeeding in poker is to fold some hands that might have won. To be good at the game you just have to learn to live with that. Playing every hand you are dealt is an easy and fast way to go broke since you would be playing too many hands that aren't profitable in the long run.

Even when you make a good decision, that doesn't mean that it was the best decision. In fact, it rarely is. Striving to improve means being willing to fight the complacency that can come from a good decision leading to a good result.

Quitting on time usually feels like quitting too early, and the usually part is specifically when you're in the losses.

As you build things, whether they're train tracks, or bookshelves, or relationships, or essays that you've written for classes, the endowment effect gaffs the scale even more, further escalating our commitment to failing causes.