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 8, “The Power of Negative Thinking”
In this chapter, Annie Duke discusses how we can improve our decision-making skills by applying various techniques such as premortem, backcasting, precommitment contracts, and category decisions. She offers the following recommendations:
- Precommitting to Your Good Intentions:
- A precommitment contract is an agreement that commits us in advance to take or refrain from specific actions. The precommitment contract also spells out the raising or lowering barriers to those actions.
- The Dr. Evil Game:
- Imagine a positive goal and any decisions that will guarantee to turn the positive outcome into failure. Also, imagine any given instance of that type of poor judgment with good enough rationale as its cloak.
- When we identify a category of poor decisions that will be hard to spot except in aggregate, we can plan what options we can or cannot choose.
- The Surprise Party No One Wants:
- People can compound adverse outcomes by making poor decisions after a bad result. We need to be prepared for our reactions to setbacks along the way.
- The term “Tilt” is a common reaction after a bad outcome causes us to be in an emotionally unstable state that compromises our decision-making quality.
- There are three ways to prepare for setbacks. First, do the hard work to identify bad outcomes and potential mitigation tactics in advance. Second, learn to recognize the signs that we are on tilt to avoid compounding bad decisions. Third, we can establish a precommitment contract that we will take in the wake of bad outcomes.
- Deflecting the Slings and Arrows of Outrageous Fortune:
- Although we cannot control luck, we can do things in advance to soften the impact of bad luck. These mitigation steps are called hedges.
- A hedge has three key features. First, a hedge reduces the impact of bad luck when it occurs. Second, a hedge has a cost. Finally, a hedge is something we hope never to need to use.