In "How to Decide," Annie Duke provides six steps to better decision making, which are highlighted here.
- 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 probability of each outcome unfolding.
- Step 4—Assess the relative preferences 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
The book begins by challenging our preconceived notions about decision-making. Duke introduces the concept of "resulting," which is the tendency to judge decisions solely based on their outcomes, rather than the quality of the decision itself. It can be seen as hindsight bias. By shedding light on the role of luck and uncertainty in our lives, Duke encourages readers to embrace a more probabilistic and open-minded approach to decision-making.
Besides, Duke introduced tools like negative thinking and decision trees. The former helps you get a holistic view of the possible outcomes, instead of just focusing on positive thinking like "Attraction Rule." It can help you review the possible black swan. The latter works like a flow chart from my engineering perspective. You list out possible outcomes and actions to take in each case. Then you don't have to panic or just trust your guts.
By the way, Duke pointed out the pitfalls of a pro-and-con list. And I agree with her on this matter. Her 3P (Preferences, Probabilities, Payoffs) analysis is better tool regarding decision-making.
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