Making decisions is something we do countless times every day, from small choices like what to eat for lunch to major life decisions like changing careers or moving to a new city. Yet despite how frequently we make decisions, most of us don't have a systematic approach to decision-making. We often rely on gut instinct or popular but flawed methods like pro-con lists.
In her book "How to Decide", professional poker player and decision-making expert Annie Duke offers a framework for making better choices and learning from our decisions over time. Drawing on insights from psychology, statistics, and her own experience as a high-stakes poker player, Duke provides practical techniques to improve our decision-making processes.
The core idea is that we need to separate the quality of our decisions from their outcomes. A good decision can sometimes lead to a bad outcome due to factors outside our control, while a poor decision might occasionally result in a positive outcome through sheer luck. By focusing on our decision-making process rather than just results, we can make more rational choices and continuously refine our approach.
This summary explores the key concepts and techniques from Duke's book, including:
- Why we tend to misjudge the quality of our decisions
- How to avoid common decision-making pitfalls and biases
- A step-by-step method for making important decisions
- Ways to gather honest feedback and learn from experience
- Techniques for handling uncertainty and probabilities
- How to balance quick decisions with more deliberate ones
By applying these ideas, we can become more skilled and confident decision-makers in all areas of life. Let's dive in and explore how to decide.
The Problem with Resulting
One of the biggest obstacles to good decision-making is what Duke calls "resulting" - the tendency to judge the quality of a decision solely based on its outcome. This is a form of outcome bias that can lead us astray.
Consider two scenarios:
You accept a new job and it turns out great - you love the work, get along well with your colleagues, and receive a promotion after a year.
You accept a different job, but it's a disaster - the work is unfulfilling, your coworkers are unpleasant, and you end up getting fired after a year.
Most people would say the first decision was good and the second was bad. But this assessment is based entirely on the results, not on the actual decision-making process that led to taking each job.
The problem is that every decision has a range of possible outcomes, from very positive to very negative. The specific outcome we end up with is influenced by many factors beyond just the quality of our initial decision - including random chance.
By focusing only on results, we fall into several traps:
We may repeat flawed decision-making processes just because they happened to work out well once.
We may abandon sound decision-making approaches that led to a negative outcome due to bad luck.
We lose compassion for ourselves and others, blaming bad outcomes entirely on poor decisions rather than recognizing the role of chance.
We fail to learn the right lessons from our experiences to improve future decisions.
To make better choices, we need to evaluate the quality of our decision-making process independently from the outcome. A good decision is one that is logically sound based on the information available at the time, even if it ends up not working out. Conversely, a poor decision-making process can occasionally lead to a positive outcome through sheer luck.
By separating decisions from results, we can more accurately assess our choices and refine our approach over time. This allows us to learn the right lessons and continuously improve our decision-making skills.
Beware of Hindsight Bias
Another major pitfall in evaluating our decisions is hindsight bias - the tendency to view past events as more predictable than they actually were at the time. This is sometimes called the "I-knew-it-all-along" effect.
After an outcome occurs, it's easy to convince ourselves that we saw it coming all along. We reconstruct our memories of the decision-making process to fit with what eventually happened, making the outcome seem obvious and inevitable in retrospect.
For example, imagine you decide to invest in a new tech startup. If the company succeeds, you might later think "I always knew they had potential" - even if you were actually quite uncertain at the time. If it fails, you might believe "I had a bad feeling about this from the start" - forgetting any optimism you originally felt.
This hindsight bias distorts our ability to accurately evaluate and learn from our decisions. It makes us overconfident about our predictive abilities and causes us to unfairly judge past choices based on information that wasn't available at the time.
To combat hindsight bias, Duke recommends using a "knowledge tracker":
Before making an important decision, write down the key information, beliefs, and reasoning that are informing your choice.
After the outcome is known, make a separate list of any new information you gained after the decision was made.
Compare the two lists to clearly see what you actually knew at the time of the decision versus what you learned later.
This simple tool helps counteract our tendency to revise history and provides an accurate record of our decision-making process. By doing this consistently, we can start to recognize the signs of hindsight bias and avoid falling into this mental trap.
Additionally, the knowledge tracker allows us to see what information we were missing that could have improved our decision. This helps us identify blind spots and gather better information for future choices.
Overcoming hindsight bias is crucial for objectively evaluating our decisions and extracting the right lessons to apply going forward. By maintaining an accurate record of our knowledge and thought process, we can make more rational assessments and steadily improve our decision-making skills.
Gather Sufficient Data
To truly learn from our decisions and improve over time, we need to gather sufficient data about both our decision-making processes and their outcomes. Relying on a single experience or data point is not enough to draw reliable conclusions.
Duke uses the analogy of scientific studies - we wouldn't trust research claiming to identify the world's best pizza based on tasting just one pizzeria. Similarly, we can't judge our decision-making ability based on a single outcome.
Ideally, we would be able to repeat the exact same decision multiple times to see the range of possible outcomes. But in real life, we rarely get the chance to make the same major choice over and over. So how can we gather more data?
One powerful technique is to use "counterfactual thinking" - imagining plausible alternative scenarios and outcomes that could have occurred. This allows us to mentally simulate multiple repetitions of a decision to gain more insight.
For example, if you're evaluating your choice to take a new job, you could imagine:
- What if you had declined the offer? Where might your career be now?
- What if you had negotiated for a higher salary? How would that have changed things?
- What if the company had gone through a major restructuring shortly after you joined?
By considering these hypothetical scenarios, you expand your data set beyond just the single outcome that actually occurred. This provides a more comprehensive view of the decision and its potential consequences.
Another way to gather more data is to look at similar decisions made by others. If you're assessing your choice of college major, you could talk to people who chose the same major as well as those who went in different directions. Their varied experiences provide additional data points to inform your evaluation.
The key is to move beyond a sample size of one. By accumulating more data - both real and hypothetical - we can start to see patterns emerge and draw more reliable conclusions about our decision-making processes.
This approach also helps combat our tendency to create overly simplistic narratives about why things turned out the way they did. By considering multiple scenarios and data points, we develop a more nuanced understanding of the complex factors that influence outcomes.
Gathering sufficient data takes time and mental effort. But it's essential for accurately evaluating our decisions and extracting meaningful lessons to apply in the future. The more information we collect, the better equipped we'll be to make wise choices going forward.
The Six-Step Decision Method
For important decisions with long-term consequences, Duke recommends using a structured six-step method to thoroughly analyze the options and make a well-reasoned choice. This process helps reduce bias and ensures we consider all relevant factors. Here's an overview of the six steps:
Identify potential outcomes: For each option you're considering, brainstorm a range of realistic potential outcomes - both positive and negative.
Assess payoffs: For each potential outcome, identify the upsides and downsides based on your personal values and goals. What would be good or bad about that particular result?
Estimate probabilities: Roughly gauge how likely each outcome is. You don't need exact percentages, but try to distinguish between highly probable vs. unlikely scenarios.
Compare positive vs. negative: Look at the balance of positive and negative outcomes for each option. Which has a more favorable overall mix?
Repeat for all options: Go through steps 1-4 for each of the choices you're deciding between.
Compare and decide: Review the preferences, payoffs, and probabilities across all your options to make a final decision.
Let's see how this might work with a concrete example. Imagine you've received a job offer in a new city and are deciding whether to accept it. Here's how you might apply the six steps:
Step 1 - Potential outcomes for taking the job:
- You love the new job and city
- You like the job but struggle to make friends in the new location
- You dislike the job but enjoy exploring the new city
- You hate both the job and city and end up quitting within a year
Step 2 - Assess payoffs:
- Loving job and city: Major boost to career and quality of life
- Liking job, no friends: Career growth but personal life suffers
- Disliking job, like city: Setback for career but new experiences
- Hating both: Wasted time and disruption to life/career
Step 3 - Estimate probabilities:
- Loving both: Moderately likely (you've done your research)
- Liking job, no friends: Somewhat likely (you're a bit introverted)
- Disliking job, like city: Unlikely but possible
- Hating both: Very unlikely
Step 4 - Compare positive/negative:
- More positive outcomes seem likelier than negative ones
Step 5 - Repeat for staying in current job
Step 6 - Compare both options and make final decision
This structured approach forces us to thoroughly think through the possibilities and tradeoffs involved in a decision. It helps overcome cognitive biases and ensures we don't overlook important factors.
While it takes more time and effort than just going with our gut, this method is invaluable for major life decisions where the stakes are high. By breaking the choice down into clear steps, we can approach it more objectively and confidently.
Of course, we can never predict the future with certainty. But this process allows us to make the best decision possible given the information available to us at the time. It also provides a clear record of our reasoning that we can refer back to later when evaluating how the decision played out.
Use Precise Probability Language
When assessing the likelihood of different outcomes, it's important to use precise language rather than vague terms. Phrases like "pretty likely" or "probably won't happen" are open to interpretation and can lead to misunderstandings.
Duke recommends using numerical ranges to express probabilities more clearly. For example, instead of saying an outcome is "very likely", you might say it has an 80-90% chance of occurring. This provides a more concrete sense of the odds.
Using precise probability language has several benefits:
It forces you to think more carefully about how certain or uncertain you really are.
It allows others to clearly understand your level of confidence.
It invites others to provide additional information that could refine your estimate.
It makes it easier to track the accuracy of your predictions over time.
When expressing probabilities as ranges, Duke suggests using a "shock test" to set the upper and lower bounds. Ask yourself: "Would I be truly shocked if the outcome fell outside this range?" The range should be narrow enough to be useful, but wide enough that anything beyond it would be genuinely surprising.
For example, if estimating the probability of getting a job offer after an interview, you might say:
"I'd put the chances at 60-75%. I'd be somewhat surprised if it was below 60%, and quite shocked if it was over 75%."
This conveys much more information than simply saying "I think I have a good shot at getting an offer."
Using precise probability language is especially important in professional contexts. Some fields have even developed standardized definitions for probability terms. For instance, in tax law:
- "Will" means 90-95% certain
- "Should" means 70-80% certain
- "More likely than not" means >50% certain
By adopting similar conventions in our own decision-making, we can communicate more clearly and make better-calibrated probability estimates.
It's also worth noting that expressing uncertainty often leads to better outcomes than false certainty. When we admit that we're not 100% sure about something, it opens the door for others to provide additional information or perspective that can improve our assessment.
So next time you're evaluating the chances of different outcomes, try to quantify your level of certainty. Even a rough numerical range is more informative than vague qualitative statements. This small shift in language can lead to clearer thinking and better decisions over time.
Combine Inside and Outside Views
When making decisions, we tend to rely heavily on our own perspective and experiences - what Duke calls the "inside view." But it's also crucial to consider the "outside view" - how others see the situation and what general patterns or statistics might apply.
The inside view is based on our personal intuition, beliefs, and circumstances. It's the story we tell ourselves about our unique situation. While this perspective is valuable, it can also lead us astray if we fail to consider broader context and data.
The outside view looks at our decision from a more objective standpoint. It considers how similar situations typically play out and what factors tend to influence outcomes. This might involve looking at relevant statistics, seeking input from others, or imagining how we'd view the situation if it involved someone else.
To make the best decisions, we need to integrate both the inside and outside views. Here's an approach Duke recommends:
Write down your inside view - your personal take on the situation and decision.
Research the outside view - look for data, patterns, and outside perspectives on similar scenarios.
Compare the two views and look for discrepancies or insights.
Adjust your thinking to incorporate both perspectives.
For example, imagine you're considering starting a restaurant. Your inside view might be very optimistic based on your passion for cooking and a great location you've found. But the outside view - statistics on restaurant failure rates and input from experienced restaurateurs - might reveal significant challenges you hadn't considered.
By combining both views, you can develop a more balanced and realistic assessment of your prospects. You might realize you need more startup capital or industry experience to succeed.
Some techniques for gaining outside perspective include:
- Seeking advice from people with relevant experience
- Researching industry statistics and trends
- Imagining how you'd view the decision if a friend was making it
- Looking for historical examples of similar situations
The goal is to expand your frame of reference beyond just your personal viewpoint. This helps counteract cognitive biases and allows you to make more well-rounded decisions.
It's natural to favor our inside view - after all, we know our own situation best. But deliberately seeking outside perspective can reveal blind spots and lead to better choices. By balancing both views, we can leverage our personal insights while also benefiting from broader wisdom and data.
Distinguish High and Low-Impact Decisions
Not all decisions deserve the same amount of time and mental energy. Duke emphasizes the importance of distinguishing between high-impact and low-impact choices so we can allocate our decision-making resources effectively.
High-impact decisions are those that will significantly affect our lives in the long term. These might include:
- Choosing a career path
- Deciding where to live
- Selecting a life partner
- Making major financial investments
For these decisions, it's worth using more thorough processes like the six-step method described earlier. The potential consequences justify spending considerable time and effort to make the best choice possible.
Low-impact decisions, on the other hand, have minimal long-term effects. These include things like:
- What to eat for lunch
- Which movie to watch
- What outfit to wear
While these choices can affect our short-term happiness, they don't warrant extensive analysis. Spending too much time on low-impact decisions leads to decision fatigue and takes mental energy away from more important matters.
To quickly assess whether a decision is high or low impact, Duke suggests using a simple "happiness test":
Ask yourself: "One year from now, will the outcome of this decision have a significant impact on my happiness?"
If the answer is yes, it's likely a high-impact decision worth careful consideration. If not, you can probably make a quicker choice without much downside.
For low-impact decisions, Duke recommends several strategies to speed up the process:
Set default choices: Have go-to options for common decisions to reduce mental effort.
Use randomization: For truly inconsequential choices, flip a coin or use a random selection app.
Embrace "good enough": Don't waste time seeking the perfect option for low-stakes decisions.
Try "freerolls": When the downside is minimal, take chances to explore new options.
Use decision stacking: Make a series of quick decisions to learn preferences over time.
By handling low-impact choices more efficiently, we free up mental bandwidth for the decisions that really matter. This allows us to be more deliberate and thorough when it comes to life's most consequential choices.
It's also worth noting that the cumulative effect of many small decisions can be significant over time. So while individual low-impact choices don't require extensive analysis, it's still valuable to develop good overall habits and heuristics for everyday decision-making.
The key is to match our decision-making approach to the importance of the choice at hand. By consciously distinguishing between high and low-impact decisions, we can optimize our mental resources and focus our energy where it matters most.
Use Mental Contrasting and Time Travel
While positive visualization is often touted as a path to success, research shows that a more effective approach is to imagine potential obstacles and failures. This technique, known as mental contrasting, helps us anticipate challenges and develop strategies to overcome them.
The basic process of mental contrasting involves:
- Envisioning your desired outcome or goal
- Identifying potential obstacles or reasons you might fail
- Developing plans to address those obstacles
For example, if your goal is to exercise regularly, you might:
- Imagine yourself being fit and energetic from consistent workouts
- Identify obstacles like lack of time, motivation, or equipment
- Plan strategies like scheduling workouts in advance, finding an exercise buddy, or setting up a home gym
Studies have shown that people who use mental contrasting are more likely to achieve their goals than those who only visualize success or only think about obstacles. By considering both the positive outcome and potential challenges, we develop more realistic and actionable plans.
Duke also recommends using "mental time travel" to gain perspective on our decisions. This involves imagining ourselves at different points in time relative to the decision. Some useful mental time travel exercises include:
Prospective hindsight: Imagine it's sometime in the future and your decision has led to failure. What went wrong? This helps identify potential pitfalls to avoid.
Premortems: Before starting a project or implementing a decision, imagine it has already failed and analyze why. This allows you to address weaknesses proactively.
Future self: Imagine how your future self will feel about the decision in 1 year, 5 years, or 10 years. This can clarify whether short-term benefits outweigh long-term consequences.
Past self: Consider how your past self from 5 or 10 years ago would view this decision. This can reveal how your values and priorities have changed over time.
These mental exercises help us break free from our current perspective and consider decisions from different angles. They allow us to anticipate problems, prepare for challenges, and make choices aligned with our long-term goals and values.
When using these techniques, it's important to strike a balance. While considering potential negatives is valuable, we shouldn't become paralyzed by imagining every possible worst-case scenario. The goal is to be realistically prepared, not overly pessimistic.
By combining mental contrasting with time travel exercises, we can make more robust decisions that account for both opportunities and obstacles. This approach leads to better planning, increased motivation, and ultimately more successful outcomes.
Elicit Honest Feedback
Getting candid input from others is crucial for making good decisions and learning from our experiences. However, people often hesitate to provide honest feedback, especially if it's negative or contradicts the opinion of the person asking.
To overcome this and gather more useful input, Duke offers several strategies:
Don't reveal your own opinion first: When asking for someone's thoughts, avoid sharing your stance upfront. This prevents the other person from simply agreeing with you out of politeness or deference.
Ask for their reasoning: Instead of just soliciting a yes/no opinion, ask people to explain their thought process. This provides more valuable insights and makes it harder for them to give a superficial response.
Use anonymity: In group settings, consider collecting feedback anonymously. This allows people to share their true thoughts without fear of judgment or conflict.
Seek input individually: Rather than asking for opinions in a group discussion, talk to people one-on-one. This reduces the influence of groupthink and social pressure.
Start with junior members: If getting input from a team, begin with the most junior members and work your way up. This prevents more senior voices from dominating the conversation.
Frame questions carefully: How you ask for feedback can significantly impact the responses you get. Use open-ended questions and avoid leading language.
Create psychological safety: Foster an environment where people feel comfortable sharing dissenting views without fear of negative consequences.
Reward honesty: Demonstrate that you value candid feedback, even when it's critical. Thank people for their honesty and avoid becoming defensive.
Ask "what am I missing?": This question invites people to point out blind spots or factors you may not have considered.
Use hypotheticals: Instead of asking directly about your situation, present a similar hypothetical scenario. This can make it easier for people to offer objective input.
By implementing these techniques, you can create conditions that encourage more honest and valuable feedback. This, in turn, leads to better-informed decisions and more opportunities for learning and growth.
It's also important to be mindful of our own reactions when receiving feedback. Our natural tendency is often to become defensive or dismiss input that challenges our views. But by remaining open and genuinely considering other perspectives, we can gain crucial insights that improve our decision-making.
Remember that the goal of seeking feedback isn't to have others make decisions for us, but to gather diverse viewpoints that inform our own judgment. By consistently eliciting honest input from others, we can overcome our personal biases and blind spots, leading to wiser choices over time.
Embrace Uncertainty and Probabilistic Thinking
One of the biggest challenges in decision-making is dealing with uncertainty. We often crave certainty and may delay decisions until we feel we have all the information. But in reality, most important decisions involve some degree of uncertainty.
Duke argues that instead of trying to eliminate uncertainty, we should embrace it and adopt a probabilistic mindset. This means thinking in terms of likelihoods rather than absolutes. Some key principles of probabilistic thinking include:
Recognize that few things are 100% certain: Almost every outcome has some chance, however small, of not occurring.
Think in ranges: Instead of trying to pinpoint exact probabilities, consider ranges of likelihood (e.g. 60-80% chance).
Update beliefs with new information: As you gather more data, adjust your probability estimates accordingly.
Consider multiple possible outcomes: Don't fixate on a single expected result; map out various scenarios.
Separate decisions from outcomes: Remember that good decisions can lead to bad outcomes due to chance, and vice versa.
Look for expected value: Consider both the probability and magnitude of different outcomes when assessing options.
By adopting this probabilistic mindset, we can make better decisions in the face of uncertainty. Instead of being paralyzed by a lack of certainty, we can act based on our best estimates of likelihood.
This approach also helps us avoid common decision-making pitfalls:
- It reduces overconfidence by acknowledging the role of chance
- It prevents black-and-white thinking by recognizing shades of probability
- It encourages gathering more information to refine our estimates
- It helps us prepare for multiple possible outcomes
To put probabilistic thinking into practice, Duke recommends several techniques:
Use precise probability language: Instead of vague terms like "likely" or "unlikely", express probabilities as numerical ranges (e.g. 70-80% chance).
Make explicit forecasts: Regularly predict outcomes and track your accuracy to calibrate your probability estimates over time.
Conduct premortems: Imagine a decision has failed and analyze why, to identify unlikely but impactful negative outcomes.
Use decision trees: Map out different possible outcomes and their probabilities to see the full range of scenarios.
Seek diverse viewpoints: Gather probability estimates from multiple people to get a more well-rounded picture.
Update incrementally: As new information comes in, make small adjustments to your probability estimates rather than dramatic swings.
By embracing uncertainty and thinking probabilistically, we can navigate complex decisions with more confidence and flexibility. This mindset allows us to act decisively while still remaining open to new information and alternative outcomes.
It's important to note that probabilistic thinking doesn't mean we can predict the future with precision. The goal is to make the best decisions possible given the information available, while recognizing that chance will always play a role in outcomes.
Balancing Quick and Deliberate Decisions
While some decisions warrant careful analysis, we also need to be able to make quick choices in many situations. Duke emphasizes the importance of balancing thorough deliberation with efficient decision-making.
For high-impact, infrequent decisions, it's worth taking the time to use more rigorous processes like the six-step method. But for routine or low-stakes choices, we need strategies to decide more quickly without overthinking.
Here are some approaches for making faster decisions:
Satisfice instead of maximize: Instead of seeking the absolute best option, aim for one that's good enough. This saves time and mental energy.
Use heuristics: Develop rules of thumb based on past experiences to guide quick decisions in familiar situations.
Automate recurring choices: Create default options or systems for decisions you face regularly to reduce decision fatigue.
Set time limits: Give yourself a deadline for making a decision to avoid analysis paralysis.
Use randomization: For truly inconsequential choices, use a random method like flipping a coin.
Trust your intuition: For areas where you have significant experience, your gut instinct can often guide quick, effective decisions.
Embrace "freerolls": When there's little downside, make quick decisions to try new things and gather more information.
The key is to match your decision-making approach to the importance and frequency of the choice. Here's a general framework:
- High impact, infrequent decisions: Use thorough analysis (e.g. six-step method)
- High impact, frequent decisions: Develop robust systems or heuristics
- Low impact, infrequent decisions: Make quick choices, embracing uncertainty
- Low impact, frequent decisions: Automate or use default options
By consciously choosing your decision-making strategy based on the situation, you can optimize your mental resources and make better choices overall.
It's also valuable to reflect on your decision-making speed and adjust as needed. If you find yourself frequently paralyzed by minor choices, practice making quicker decisions in low-stakes situations. Conversely, if you tend to make important decisions too hastily, build in processes to slow down and analyze more thoroughly.
Remember that the goal is not to make perfect decisions every time, but to develop a flexible approach that allows you to navigate both major life choices and everyday decisions effectively. By balancing quick and deliberate decision-making strategies, you can improve your overall decision quality while managing your time and mental energy efficiently.
Conclusion: Continuous Improvement in Decision-Making
Throughout "How to Decide", Annie Duke emphasizes that becoming a skilled decision-maker is an ongoing process. It's not about achieving perfection, but rather about continuously refining our approach and learning from our experiences.
Here are some key takeaways for improving your decision-making over time:
Focus on the process, not just outcomes: Evaluate the quality of your decisions based on the information and reasoning used, not solely on results.
Track your decisions: Keep a record of important choices, your reasoning, and the outcomes to identify patterns and areas for improvement.
Embrace uncertainty: Adopt a probabilistic mindset and get comfortable making decisions with incomplete information.
Seek diverse perspectives: Actively look for viewpoints that challenge your own to broaden your understanding.
Practice in low-stakes situations: Use everyday choices as opportunities to apply decision-making techniques and build your skills.
Reflect and adjust: Regularly review your decision-making processes and outcomes to refine your approach.
Be kind to yourself: Recognize that even good decisions can sometimes lead to poor outcomes due to factors beyond your control.
Stay curious: Continuously seek to learn more about decision science, cognitive biases, and strategies for clearer thinking.
By applying these principles consistently, you can steadily enhance your decision-making abilities across all areas of life. This leads to better outcomes over time, increased confidence in your choices, and reduced stress when facing difficult decisions.
Remember that decision-making is a skill that can be developed like any other. With practice and conscious effort, you can become more adept at navigating both major life choices and everyday decisions.
Ultimately, the goal is not to eliminate uncertainty or guarantee perfect outcomes, but to make the best possible choices given the information available. By adopting a structured approach to decision-making and committing to ongoing improvement, you can significantly enhance your ability to make wise choices and achieve your goals.
As you apply the techniques from "How to Decide" in your own life, stay patient and persistent. Changing ingrained decision-making habits takes time, but the long-term benefits of more thoughtful, well-reasoned choices are well worth the effort. With practice, you'll find yourself making decisions more confidently, learning more effectively from your experiences, and ultimately creating better outcomes in all areas of your life.