The New Revolutionary Way To Think About Decision-Making
The (ir)rational art of choosing your bets wisely
Every decision you make is a bet. It’s a bet because you–as everybody on Earth–operate on imperfect, often scarce information. Yet, some people undoubtedly do better than others. Is it pure luck? Sometimes.
However, luck tends to go away just as quickly as it comes.
Therefore, it must be due to something else. Recently, I listened to a podcast episode with a professional poker player, and I became interested in how professional gamblers think. One of the crucial differences is that pros remember well that the game is continuous.
It means that before making a serious, long-term decision, there’s a lot you can do to maximize the chances of it being a good one. Thus, one of the best investments you can make is to develop your decision-making muscle and intuition.
Of course, the circumstances change, and conditions alter. However, a once-developed approach will enormously help you with every new choice. Now, there are many established processes for making decisions.
However, often they don’t include information on how to use them efficiently. You see, the steps of decision-making are not equal in terms of the effort you should put into them.
For example, you could spend hundreds of hours analyzing options, but it won’t push your life forward without implementing them and testing the results. Yet, this disparity is hardly mentioned.
Today, I’d like to challenge this attitude and reverse-engineer the way you think about decisions.
This tool will help you choose your bets wisely every single time
Although every decision is a bet–their quality is certainly not equal. There are a few factors that rule that out. First, there’s the number of options. Two is too few. Thus, if you believe you only have two choices, that’s a failure of imagination (or perhaps research.)
For example, let’s take a decision most of us consider(ed) at some point: going to university. Regarding it as a yes-no choice drastically narrows down your perspective. Who says that you have to go now and cannot first do some work to invest the capital or even start a business?
Not to mention the idea of “back-packing Europe/USA to find yourself,” going for an exchange, doing voluntary work abroad, and so on. That’s a real sea of possibilities, my friends. However, you need to throw most of them out!
The most time-efficient way to do that is to review them by their expected value. “Expected value” in this context refers to the perceived reward (-cost) multiplied by the probability of it. Of course, that’s a rather mathematical way of putting it, and you don’t have to do the actual counting. Just have these criteria in mind when reviewing options.
Going back to our university example, let’s say you want to start a business first/alongside your studies. For that purpose (and because it’s trendy), you’re considering setting up a YouTube channel.
According to expected-value-thinking, you need to find out about the reward minus cost and the probability of success. Don’t spend too much time on this–it’s just to give you a rough idea of whether it’s reward positive.
Let’s say you did some basic research, and it turned out that it’s a game worth playing (the reward is big enough to account for the risk). However, you still have other options with a possibly higher expected value. Therefore, quickly repeat the process for them and choose the potentially best one (it’s merely a hypothesis, for now), so don’t sweat it.
Of course, you’ll probably distort the ‘real’ expected value of the options. However, this isn’t a big problem because there’s a way to mitigate it. To do that, first, you need to change your perspective on decision-making.
The mental shift that will forever change your decision-making process
What is the default attitude we have toward making choices? I’d say there are two very prominent aspects of them:
- They’re all or nothing: you either go traveling the world or you don’t.
- You make them once and stick to them for as long as possible (even if you hate the outcome).
Now, pardon my indelicacy–but this perspective is trash. Firstly, it sabotages your ability to make good, calculated decisions. Secondly, it teaches you to give your best (uneducated!) guess and live by it until you can’t stand it anymore.
Whether it concerns choosing a major, career, or relationships–it all works the same. And I bet we all know how it ends.
Therefore, I want to share with you an alternative solution that is better fitted to how we operate in reality. First, let’s beat perfectionism. If you think about decisions as all or nothing and forever bounding, perfectionism will paralyze you by overthinking and prolonged hesitation.
Thus, think about your goals, options, and decisions as hypotheses. And about yourself–as an experimenting scientist. You see: with hypotheses you only have a rough idea of what and how to achieve something but no reliable data. Isn’t that true in our case?
So, how do you approach a hypothesis? Well:
- Before making any impactful decisions, you should run a test.
Going back to the YouTube channel example: before you invest your time and energy in setting up a channel, try filming a couple of videos first to see if it suits you in the first place. - You can tweak or completely change all your (hypothetical) decisions.
If it turns out that you don’t fancy recording videos after all–drop it and move on to test the next position with the highest expected value on your list. - Once you find a perfect candidate, invest in a “longitudinal study.”
If the results are promising, i.e., you enjoyed making these videos, run a long-term experiment to see if you’re a good fit for it. With YouTube, I heard you should invest about two years of work to see tangible results–but don’t take my word for it!
When you go through these three steps, I guarantee decision-making will become much more fun. However, remember that after you decide to do a more extended experiment–there’s no backing down during the testing period! So don’t overthink; just do your work and enjoy the process.
Use failure to grow your decision-making muscle
Many of your experiments (either short or long) may eventually be crap. However, believe it or not, this is a desirable effect.
If you “failed” it means that some of your assumptions were incorrect: you either overestimated the size of the reward or the probability of it. The key is to pinpoint what exactly led you astray. If you do that–congratulations!–you have tuned out your decision-making intuition a bit closer to reality.
I promise that following the above process will make your guesses more and more accurate, leading to better and better outcomes!
Final thoughts
There was a lot of information today, so let me recap your decision-making workout plan:
- Gather your options and analyze them using the expected value (reward minus cost multiplied by the probability of success).
- Choose the one with the highest expected value.
- Treat the decision as a hypothesis: before taking any impactful actions, do a small experiment to test the option.
- If it turns out to be crap, move on to the next thing on your list.
- Once you find “the thing,” dedicate yourself for as long as necessary to see the first tangible results. Don’t overthink.
Wow, writing this article was quite challenging. I blame my chaotic thoughts: it was a real feat to tame them into something intelligible. Yet, I hope that I did manage to teach you a new, transformative way to make decisions which was exactly my purpose.
Wow, writing this article was quite challenging. I blame my chaotic thoughts: it was a real feat to tame them into something intelligible. Yet, I hope that I did manage to teach you a new, transformative way to make decisions which was exactly my purpose.
Cheers!
— Anna
