Annie Duke on How to Decide, Part 5

In her book, How to Decide: Simple Tools for Making Better Choices, Annie Duke discusses how to train our brains to combat our own bias and help ourselves make more confident and better decisions.

These are some of my favorite concepts and takeaways from reading the book.

Chapter 5 “Taking Dead Aim at the Future: The Power of Precision”

In this chapter, Annie Duke discusses how imprecise we can be when we try to factor probability into decision-making. She offers the following recommendations:

  • We should avoid relying too much on natural language terms that express likelihoods, such as “very likely” and “unlikely.” They can be useful occasionally, but they are still blunt instruments for analyzing and communicating probability.
  • To improve our decision-making, we need to find ways to improve our estimates continually. If we hide behind the safety of a general, vague term for probability, there is very little motivation to check our information and learn more.
  • General terms that express likelihood also mean very different things to different people. Using those ambiguous terms can lead to confusion and miscommunication with people we want to engage for help.
  • What we need to do is to be more precise by expressing probabilities as percentages. Using specific numbers can help us uncover information that can correct our beliefs’ inaccuracies and broaden our knowledge.
  • In addition to making a precise (bull’s-eye) estimate, we should also include a range, with a lower and upper bound, around that estimate to express our uncertainty. This notion of using range is similar to the concept of the confidence interval in statistics.
  • Annie also suggests using the “shock test” to gauge whether our upper and lower bounds are reasonable. In other words, would we be shocked if the correct answers ended up outside that range? Our goal should be to have approximately 90% of our estimates capture the objectively real value.