24 Short Lessons on Rational Decision Making to Read Over

Image: Ruben Christen

1. If you want to have a good life, clarity should be your primary value. Nothing can be good if rooted in fallacy.
2. Constantly update your knowledge about the world. Odds are, you’re deriving conclusions from outdated information at any given moment. Our maps of reality are only useful when aligned with reality.
3. Identify your actual expertise and stick within it when making high-stake decisions. If you master this, you will win in the majority of cases.
4. Differentiate experience from expertise. If you need the latter, make sure you have sufficient evidence that supports it.
5. Avoiding stupidity yields better results than seeking excellence. Focus primarily on how and where you may fail instead of how you will succeed.
6. When faced with a decision, don’t automatically agree or disagree. You might be trying to confirm your existing worldview and not seeing reality as it is.
7. Changing decisions after the first conclusion is challenging. Reserve conclusions until you’ve seen the subject from all possible angles. Otherwise, you will, likely, try to confirm your initial conclusion instead of being open to other possibilities.
8. When making a bet, consider steady trends and patterns. Don’t base assumptions on the shiniest, easiest-to-remember, and most familiar things unless they are part of a trend.
9. We’re good at recognizing patterns but we often miss the point that they can be true only if there’s sufficient data in place. When assuming a trend, make sure your conclusions aren’t based on the most available and comfortable input.
10. Over short periods, luck is more crucial than skill. More data and time are needed to distinguish between skill and pure chance when luck plays a significant role.
11. The fear of loss guides us more than the possibility of winning. Knowing the real possibilities of loss and win can help you grow in most situations.
12. Don’t stick to a solution just because it’s familiar in your circle. Or do it and acknowledge that at the moment conformity is more important for you than solving.
13. Avoid acting immediately after learning about a problem unless it’s an emergency. Urgent decisions are often the most clouded.
14. Stress, new circumstances, triggers, and mood swings impact decision-making. If you don’t factor them in, their impact would be even greater.
15. Be aware of overconfidence, both in yourself and others. The same trait that, in certain cases, drives people to build innovative businesses can lead to a significant waste of time and money in other cases.
16. Resilience isn’t the same as antifragility. If you want the latter, focus on training yourself to fail instead of building resistance.
17. For every action, there is an equal and opposite reaction. Focus on your actions to see what you’re likely to get back.
18. The desire to be right and the desire to have been right are separate. The first seeks truth and the second strives for pride.
19. Don’t expect consistency from people. Projecting once observed behavior onto a trait and then extrapolating this trait to the entire personality is delusional. Draw conclusions from evidence.
20. Don’t assume people are rational. Learn about potential biases and fallacies and try to keep them in mind when predicting of how situations may unfold.
21. We’re naturally inclined to like things we’re more involved with. The more involved we are, the less objective we become. Stick to facts in important decisions.
22. Avoid seeking consensus. Instead, have a strong decision-maker and a structured process if you need to make a decision with more than one person in a room.
23. If past events seem more predictable in hindsight, it’s likely an illusion. Rely on documented data.
24. If you want to have a fulfilling life, develop healthy coping mechanisms for anxiety. The consequence of choosing fast gratification to manage anxiety over a period of time is that your creative efforts will become much harder.

This list is based on the work of incredible thinkers such as D. Kahneman, A. Tversky, G. Klein, C. Munger, and N. Taleb.