Breaking through the complexities, there are only two things that determine the general direction of our lives: luck and the quality of the decisions we make. The former are random variables, and the latter are factors that we can control to improve the direction of our lives.

Before making a decision: clarifying misunderstandings

Essentially, any decision is a prediction of the future.

However, many people have two serious thinking errors in the decision-making process: one is “result-oriented”, and the other is “hindsight bias” (in hindsight).

“Results-oriented” means that people will judge the quality of decisions based on the quality of the results. In every field, it is often the outcome that determines the quality of the decision.

You buy a stock and it quadruples – great decision! You buy a stock and it’s almost gone – bad decision!

You start exercising, and after two months, you’ve lost weight and gained muscle – great decision! But if your shoulder is dislocated within the first two days of a workout, that’s a bad decision!

There are many factors that affect the results. In short, in addition to the quality of decision-making controlled by individuals, there is also the random parameter of “luck”.

The decisions you make (possibly with multiple outcomes) will have actual results because of luck intervening. Combining decision quality and outcome, there are four outcomes:

• Good decisions + good results are deserved;

• Good decision + bad result is bad luck;

• Bad decisions + good results are shit luck;

• Bad decisions + bad results are self-inflicted.

If you fall into the misunderstanding of “result-oriented” thinking, you will interpret shit luck as your own smart decision-making, and follow the wrong decision-making method.

It’s not easy to let go of the idea that “good things happen to me,” but it’s worth it in the long run.

Just a small change in the attitude of ignoring luck can have a huge impact on your lifestyle. These small changes, like compound interest, can pay off handsomely in your future decisions.

Another thinking error, “hindsight bias”, is a fallacy brought about by memory.

We constantly narrate the whole event according to the logic that can justify it after it happened, and revise our memory according to the plausibility of the narration. This is what we often call “after the fact Zhuge Liang”.

When you’re making decisions, there are some things you know and some things you don’t. And of all the possible outcomes, what really happened must be something you didn’t know about.

But in hindsight, when you know it really happened, it’s like = “As expected” or “I knew it.” Actual results distort your memory of the decision-making process.

If there’s anything worse than regretting “Should have known” for the rest of your life, it’s listening to someone say “I said so” to you while you regret it.

To correct the hindrance of “backsight bias” to improving our decision-making level, we must faithfully record our thoughts, factors to be considered, and predictions of possible future results in the major decision-making process as a tool to assist memory. Then when the results come out, when you review the test, there is an objective and clear record, and you don’t need to fight with your own memory.

Easy to use “6-step decision-making method”

Our life is a constant decision-making process. What we need is to master a good decision-making framework, which can improve our decision-making level and the most favorable range of the overall decision-making result in terms of probability, rather than pursuing the best result of a specific decision, which is no one Not guaranteed.

Duke divides the decision-making framework into 6 main steps

1. To find a reasonable set of possible outcomes, list as many possibilities as possible.

2. Determine preferences by comparing the rewards of each outcome – how much do you like or dislike each outcome in terms of value proposition?

3. Assess the likelihood of each outcome occurring (probabilistic thinking).

4. Evaluate the relative likelihood that candidate decisions will yield outcomes you like or dislike.

5. Consider other candidate decisions and repeat steps 1 – 4.

6. Compare these decision options.

How good or bad the results are, and how good or bad they are, depends on your goals and values.

No matter what decision you make, you will always expect some outcomes and reject others. Almost every outcome will give you something to lose. These gains and losses are rewards, and they determine preferences, because you obviously prefer gains to losses.

In a set of possible outcomes, the rewards of some outcomes will give you something that you value, and these rewards constitute the positive side of a decision;

Some of the rewards of outcomes that make you lose what you value, constitute the negative side of a decision. Most decisions have both positive and negative sides.

Step 2 is to judge the “return”. You can measure returns in whatever you fancy: money, time, happiness, health, the happiness, health or wealth of others, social currency, etc.

When you’re judging whether a decision is good or bad, you’re asking whether its positive potential can offset its negative risks. Measuring the quality of a decision requires the ability to compare whether your gains are worth the risks.

Step 3 involves estimating the “probability” of each outcome, both by summarizing the information you already have, and by recognizing what more important information needs to be collected.

Without information, you just don’t know anything. Complete information is that you know everything. For most things that require estimation, you don’t go to the extremes of no information or complete information, but somewhere in the middle.

Making educated guesses makes a lot of sense. The more willing you are to guess, the more you will think about and apply what you know. Also, you’ll start thinking about the things you can find that will bring you closer to the answer.

Step 4 requires a weighted average of all possible outcomes listed in Step 1 according to returns and probabilities to obtain the expected value brought by this optional direction. This expected value is the mathematical quantification of whether you “like” or “dislike” this option.

Many people think that there are only right and wrong sides of things, and no middle ground, and that is an important obstacle to being a good decision maker. This “intermediate state” is the probability or probability of something happening. You need to make a bold guess, aiming at the bull’s-eye like an arrow, but other parts of the arrow cluster that may reach you can also score points.

When making decisions, our goal is to choose the option that is most conducive to achieving our ideal based on a willingness to take a certain risk (if there is no good option, then our goal is to choose the option with the least damage).

How to improve the accuracy of guessing?

How can we improve the accuracy of these “educated guesses” and bring our guesses closer to the bullseye?

The tool Duke gives us is to consider both the “inside perspective” and the “outside perspective.”

Introspection refers to seeing the world from one’s own perspectives, beliefs, and experiences. We are very bad at discovering what we don’t know, and very bad at judging whether our beliefs are wrong. We are overconfident in what we think we know. Many common cognitive biases are in some way the product of an inner perspective.

Outside perspective refers to how others see your situation outside of your own point of view, or refers to the real situation of the world. To make up for the inside perspective is to get rid of the influence of one’s own experience and to understand as much as possible the perspectives of others and the world for what it is, because that is where the corrective information is.

Your intuition serves the inner perspective. The same goes for the sixth sense. And both intuition and sixth sense are influenced by your wish to come true. An outside perspective is the “good medicine” to counteract this effect.

The value of knowing someone else’s point of view is not only that they know useful information that you don’t know and can correct inaccuracies in the information you know, but that even if they have the exact same information, they may come up with a different opinion. The information is the same, but the conclusions can be very different.

The external perspective can correct the errors and deviations of the internal perspective, so when looking at problems, you must first start from the external perspective.

Allowing different viewpoints to collide and accepting the different ways others see things will bring you closer to the truth. The closer you get to objective facts, the less spam you will use in your decisions.

3 ways of thinking when making decisions

1. The Well-Being Test: A “Barometer” of Long-Term Goals

Broadly speaking, well-being is a “barometer” for seeing whether a decision will affect the achievement of long-term goals.

When you find that the potential gain or loss (measured by happiness) is negligible, it means the decision is of the low-impact type and can speed up the decision-making process.

There is a class of decisions that no matter what you choose (eat chicken or fish, watch Powershots or The Princess Bride, wear a gray suit or a blue suit), it doesn’t work out in the long run (or in the short run). It can have a huge impact on your well-being.

If the thing you’re thinking about passes the happiness test, you can speed up your decision-making because there’s nothing to lose by doing it less “just right.”

While many decisions do not significantly affect long-term well-being, one bad outcome still has a short-term cost: regret.

Regret (or fear of regret) can make you hesitate about almost any choice. After a bad outcome, basically everyone regrets it immediately. Worrying about regret can lead to “analysis paralysis,” because you take for granted that spending more time making a decision is less likely to have a bad outcome, and less likely to experience the accompanying regret.

If you’re obsessed with short-term feelings without considering the long-term impact (which is what really matters), you’ll be unable to make decisions out of fear of regret. The price of fear of regret is time.

Repeated choices help to downplay regret.

The so-called repetitive choice is that you can make the same choice again after making a decision. This is especially useful when the selection comes back quickly. You might really hate ordering at a restaurant at lunch, but you’ll have the opportunity to order at dinner a few hours later. This helps to eliminate the pain of regret in the short term.

• Choosing a university course is a repetitive choice.

• The person who chooses the first date is a repetitive choice.

• Choosing a driving route is a repetitive choice.

• Choosing which movie to watch is a repetitive choice.

Repeating decisions also gives you the opportunity to choose things you’re not quite sure about, such as eating foods you haven’t eaten, watching shows you haven’t watched, and you won’t pay dearly for those attempts. For a small price, you can learn your likes and dislikes, and maybe discover some surprises.

2. But it’s okay to try: make quick decisions when losses approach zero

“But it’s okay to try” is a useful mindset that allows you to seize opportunities quickly.

The key feature of “but it doesn’t matter” is that the downside risk is limited, which means there is no big loss (but a big gain is possible). When you’re in a “try it out” situation, speeding up your decision usually doesn’t increase the likelihood of a worse outcome.

To judge whether the downside risk to a decision is limited, you can ask yourself the following two questions:

• What is the worst outcome?

• If the outcome is not satisfactory, will I be in a worse situation than before the decision?

If the worst outcome is not that bad, or if the outcome isn’t as bad, you’re not worse off than you were before, this decision can be “but try it.” That is, you can speed up decision making because there is a limit to the cost of sacrificing accuracy.

You might think, “but it’s okay to try” is good, but in reality, there is no such good thing. However, once you pay attention, you will find that there are more “but it’s okay” situations than you think.

You are applying to college. The college of your dreams is hard to apply to, and your chances of being accepted are low. Do you still want to apply? Assuming the application costs aren’t high, it won’t get any worse if you don’t get in, but if you do, you get into the college of your dreams.

You are looking at the house. Unsurprisingly, you found your dream home with a real estate agent, but it sold for 20% more than your highest bid. Are you still bidding? You bid at your own price, the seller rejects it, and you have nothing to lose. But if the seller accepts, you can buy the house you want at a low price.

Once you’ve confirmed “but it’s alright,” you don’t have to think too hard about whether to take the opportunity, but you still need to take the time to implement the decision.

Decide quickly whether to apply to a college with a low chance of admission, but take the time to ensure the quality of your application materials. Decide quickly whether to bid on your dream home, but take the time to make sure your bid is reasonable.

The quicker you decide, the less likely the opportunity will slip away. The quicker you seize the opportunity, the more likely you are to spot the upside potential of that decision.

3. Hard to decide = easy to choose

Next year you have a week off and you decide to go on a long trip. You’ve narrowed your destination down to two cities: Paris or Rome. (Alternatively replace the two destinations in this thought experiment with places you especially like or want to go to but haven’t been.)

Generally speaking, you will worry about these kinds of decisions. After all, deciding whether to go to Paris or Rome will fail the happiness test. A vacation like this is sure to affect your well-being for a week, a month, or even a year. Unless you travel abroad a lot, this is not a recurring choice, but probably a once-in-a-lifetime choice. If the decision is wrong, the price will be high.

We all face many high-impact decisions like where to vacation in Europe. You might get accepted to two colleges of your dreams, you might find two great homes, or you might get two dream jobs. Then you start worrying about choosing, trying to figure out the nuances between two or more good options.

Let’s do a weird little thought experiment: What if instead of choosing between Paris and Rome, you were choosing between Paris and a salmon cannery? Do you have difficulty or anxiety?

I think the answer is no.

This suggests that similar options are what slows down the decision. You won’t have a hard time choosing between options with wildly different potential returns, like a week-long vacation in Paris or a week in a “fish in the water” pile.

That’s why you can and should speed up when it comes to these kinds of decisions.

What slows down decision-making, multiple options of very similar quality, is actually a signal to speed things up—since two options have similar upside potential and downside risks, it’s impossible to go wrong either way.

If you consider decisions in terms of the relative quality of the options being compared, you’re in a good position. Instead of spending a lot of time trying to figure out the nuances between options, revisit your decision and ask yourself, “How wrong would I be if I picked anything?”

This question will make you think forward, recognizing that it is the potential of each option that affects the quality of your decision, not which possible outcome happens to arise. This question will show you that both options are great, so you’re unlikely to go horribly wrong whichever you choose.

Therefore, these kinds of decisions are actually hidden “but try it.” Since the options are close together, you can try anything you want, and you can’t go wrong with whatever you choose. This unlocks a powerful decision-making principle: when it’s hard to make a decision, it’s actually easy to choose.

When you’re struggling with similar options, you’re usually wasting time doing nothing. You spend a lot of time trying to find the slightest difference between the two, and at best see only a small gap in potential benefits.

4. Break the Ice: The Only Choice Quiz

In his book, The Paradox of Choice, Barry Schwartz points out that the more choices you have, the more likely you are to have a hard time choosing;

This is the paradox of choice: the more choices, the more anxiety.

If it’s between Paris and the salmon cannery, no one has a problem. But what about Paris, Rome, Amsterdam, Santorini and Machu Picchu?

You can break the ice with the Unique Choice Quiz. When making decisions ask yourself, “Would I be satisfied if this was the only option?”

The Only Choice Quiz can weed out spam that hinders your decision-making. You can only go to Paris and you feel content; you can only go to Rome and you still feel content. If so, you’ll be happy no matter what you choose.

This strategy of choosing what to order from a menu can be widely used for general decision-making. With any decision, take the time to distinguish between likes and dislikes. Then, you can make quick decisions.

Classification, that is, finding “good” choices based on your value orientation and goals, is the biggest gain that decision time can bring you. Classification is the heart of the decision and the value of slowing down.

When you’re done sorting and picking out one or more good options, it doesn’t hurt to speed things up. If the options are very close, you might as well choose at will. Spend more time picking among the options that meet the criteria, and the accuracy of the decision is usually not much higher than that of random selection.

This is why it is so important to identify low-impact decisions, especially those that are repetitive. These types of low-stakes decisions give you the opportunity to try. Experimenting will tell you what works and what doesn’t and helps you figure out what you like. With these attempts, you can gain more information and pay off in more accurate classifications.

From a long-term perspective, you should think of all decisions in life, big and small, as managing a portfolio, and your goal is to satisfy yourself with the overall return of the portfolio.

Instead of sticking to the success or failure of each individual investment, because the role of luck cannot be accurately measured in a single investment.

This article is reprinted from: https://news.futunn.com/post/16156644?src=3&report_type=market&report_id=207258&futusource=news_headline_list
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