How to Decide:
Simple Tools for Making Better Choices
by Annie Duke
After finishing this book in January of 2023, I wrote,
"A comprehensive, readable, step-by-step approach to making much better life decisions. Pardon me, Annie, for taking exception to your 'Mr. Evil' technique (not covered below). It's equivalent to villainizing our Now. Overall, however, my hat is off to you."
My clippings below collapse a 288-page book into 9 pages, measured by using 12-point type in Microsoft Word."
Here are the selections I made:
Because there are only two things that determine how your life turns out: luck and the quality of your decisions. You have control over only one of those two things.
Even though the importance of making quality decisions seems obvious, it’s surprising how few people can actually articulate what a good decision process looks like.
This is actually not that surprising. Outside of vague directives about encouraging critical-thinking skills, decision-making is not explicitly taught in K–12 education.
In every domain, the outcome tail is wagging the decision dog. There’s a name for this: Resulting. When people result, they look at whether the result was good or bad to figure out if the decision was good or bad. (Psychologists call this “outcome bias,” but I prefer the more intuitive term “resulting.”) We take this resulting shortcut because we can’t clearly “see” whether the decision was good or bad, especially after the fact, but we can clearly see if the outcome was good or bad.
A necessary part of becoming a better decision-maker is learning from experience. Experience contains the lessons for improving future decisions. Resulting causes you to learn the wrong lessons.
The quality of the outcome casts a shadow over our ability to see the quality of the decision.
If you want some examples, go back to the very first questions I asked you: What were your best and worst decisions of the last year? The point of having you write those down is that most people don’t actually think much about their best and worst decisions. They usually start by thinking of their best and worst outcomes and work backward from there. That’s due to resulting.
When you make a decision, the decision makes certain paths possible (even if you don’t know where they lead) and others impossible. The decision you make determines which set of outcomes are possible and how likely each of those outcomes is. But it doesn’t determine which of that set of outcomes will actually happen.
Because any decision determines only the set of possible outcomes (some good, some bad, some in between), this means good outcomes can result from both good and bad decisions, and bad outcomes can result from both good and bad decisions.
When you overfit decision quality to outcome quality, you risk repeating decision errors that, thanks to luck, preceded a good outcome. You may also avoid repeating good decisions that, because of luck, didn’t work out.
Resulting makes us lack compassion for ourselves and others.
And it’s not just other people. We lack self-compassion when we make these connections in our own lives. We beat ourselves up when things don’t work out the way we had hoped.
Resulting is the tendency to look at whether a result was good or bad to figure out whether a decision was good or bad.
In the short-term, for any single decision, there is only a loose relationship between the quality of the decision and the quality of the outcome. The two are correlated, but the relationship can take a long time to play out.
You can’t tell that much about the quality of a decision from a single outcome, because of luck. When you make a decision, you can rarely guarantee a good outcome (or a bad one). Instead, the goal is to try to choose the option that will lead to the most favorable range of outcomes.
Hindsight bias adds to the ruckus caused by knowing the outcome, distorting your memory of what you knew at the time of the decision in two ways: You did know what was going to happen—swapping out your actual view at the time of the decision with a faulty memory of that view to conform to your postoutcome knowledge. You should (or could) have known what was going to happen—to the point of predictability or inevitability.
Memory creep is the reconstruction of your memory of what you knew that hindsight bias creates.
Hindsight bias, like resulting, makes us lack compassion for ourselves and others.
Hindsight bias is the tendency to believe that an outcome, after it occurs, was predictable or inevitable.
A lot of experience can be an excellent teacher. A single experience, not so much.
There are many possible futures, but only one past. This makes the past feel inevitable, as even the tiniest of twigs now looks like the thickest of branches because it’s the only thing you can see.
SIX STEPS TO BETTER DECISION-MAKING Step 1—Identify the reasonable set of possible outcomes. Step 2—Identify your preference using the payoff for each outcome—to what degree do you like or dislike each outcome, given your values? Step 3—Estimate the likelihood of each outcome unfolding. Step 4—Assess the relative likelihood of outcomes you like and dislike for the option under consideration. Step 5—Repeat Steps 1–4 for other options under consideration. Step 6—Compare the options to one another.
Pros and cons lists are flat, as if (payoff) size doesn’t matter. Because it is merely in list form, a pros and cons list treats the chance of an early arrival as equal to the possibility of getting into a serious traffic accident. Without explicit information about size, about the magnitude of any pro or con, it is unclear how you would compare the positive and negative sides of the list. If there are ten pros and five cons, does that mean you should go with the decision? It is impossible to say without information about the size of the payoffs, because without that you can’t figure out if the upside potential outweighs the downside.
To figure out whether a decision is good or bad, you need to know not just the things that might reasonably happen and what could be gained or lost, but also the likelihood of each possibility unfolding. That means, to become a better decision-maker, you need to be willing to estimate those probabilities.
Here’s a secret: All guesses are educated guesses because there is almost no estimate you could make about which you literally know nothing.
Andrew Mauboussin and Michael Mauboussin came up with this pretty comprehensive list of these types of terms for a survey they conducted: Almost always More often than not Serious possibility Almost certainly Never Slam dunk Always Not often Unlikely Certainly Often Usually Frequently Possibly With high probability Likely Probably With low probability Maybe Rarely With moderate probability Might happen Real possibility
Some of these terms had startlingly wide ranges, which I imagine you experienced in your four-person survey. For instance, “real possibility” had a range of about 20% to 80%. A quarter of the people taking the survey thought the term meant 40% of the time or less. A quarter thought it meant 40% to 60%. A quarter thought it meant 60% to 75%. Finally, a quarter thought it meant over 75% of the time.
People didn’t even agree on what the terms always and never meant! If you’re like most people, you were pretty surprised by these results. Most of us aren’t aware of the wide range of what these words mean to different people. We assume that when we use a term, other people use it in the same way we do and mean the same thing we do.
Precision uncovers disagreement. It uncovers places where your belief is different from someone else’s belief. And that’s good, because you want to find out when you have something wrong. It gives you the chance to get it right. Think about it like this: Saying “2 + 2 is a small number” will help you get better at math, but it won’t help you become an expert. “A small number” is technically correct, but it is much more helpful for your teacher to find out if you think the answer is 5, or 2, or 4, which are all small numbers. It’s true that the less precise answer makes it harder to be wrong, but you want to find out when you have the wrong answer if you are going to get better at math.
Natural language terms that express likelihoods, like “very likely” and “unlikely,” are useful but blunt instruments. The drive to improve on your initial estimates is what motivates you to check your information and learn more. If you hide behind the safety of a general term, there’s no reason to improve on it or calibrate.
Terms that express likelihoods mean very different things to different people. Using ambiguous terms can lead to confusion and miscommunication with people you want to engage for help. Being more precise, by expressing probabilities as percentages, makes it more likely you’ll uncover information that can correct inaccuracies in your beliefs and broaden your knowledge.
In addition to making precise (bull’s-eye) estimates, offer a range around that estimate to express your uncertainty. Do this by including a lower and upper bound that communicate the size of your target.
The size of the range signals what you know and what you don’t know. The larger the range, the less information or the lower the quality of the information informing your estimate, and the more you need to learn. Communicating the size of the range also signals to others that you need their knowledge and perspective to narrow the range.
What is hopefully (crystal ball) clear by now is that your beliefs create a bottleneck to good decision-making. It doesn’t matter how good the quality of your decision process is if the input into that process is junk. That input is your beliefs, and there is a lot of junk in there.
It’s like you have a KICK ME sign on your back when it comes to identifying inaccuracies in what you know and believe. You can’t see the sign because your eyes can see only what’s in front of you. No matter how fast you spin around, you just can’t see yourself from the back. Someone keeps kicking you, it’s getting irritating, and you can’t figure out why, even though you can clearly see the KICK ME signs on everybody else.
More than 90% of professors rate themselves as better-than-average teachers. About 90% of Americans rate their driving ability as better than average. Only 1% of students think their social skills are below average.
This phenomenon is called the better-than-average effect.
The outside view disciplines the distortions that live in the inside view. That’s why it’s important to start with the outside view and anchor there, considering things like what’s true of the world in general or the way someone else would view your situation.
It is uncomfortable to think about the possibility of failure, but it’s worth it to live in that discomfort because you will be better prepared if things don’t turn out according to your ideal.
Now for the bad news: Being smart doesn’t make you less susceptible to the inside view. If anything, it makes it worse. It straps your beliefs into the driver’s seat more firmly. Research across a variety of settings has shown that being smart makes you better at motivated reasoning, the tendency to reason about information to confirm your prior beliefs and arrive at the conclusion you desire.
It’s embarrassing when someone tells you that you have something stuck in your teeth. It’s more embarrassing when that stuff stays stuck in your teeth because no one told you. By “being kind” and keeping what they see from you, they inadvertently deny you the chance to get the spinach out of your teeth.
Be thankful when people disagree with you in good faith because they are being kind when they do.
That’s why we naturally end up in echo chambers. The inside view feels especially good when it’s sold as the outside view, in the guise of someone supposedly offering an objective perspective that merely confirms what you believe. But that only serves to amplify the inside view, strengthening your view of the world because it feels certified by others.
Seek out the outside view with an open mind. You’ll be more likely to find out about the KICK ME sign on your back, the spinach in your teeth, and all the things you’re having trouble seeing from your perspective. That will help you clear out the junk, which will improve your decisions.
When it comes to the bad stuff, the inside view tends to lead you to blame luck rather than your own decision-making. After all, luck is the easiest escape hatch for keeping your self-narrative intact. But identifying luck as the primary culprit for your situation won’t help you much in addressing the situation.
The smaller the penalty, the faster you can go. The bigger the penalty, the more time you should take on a decision.
The information you gather is not just about learning new facts, or figuring out how things work, or refining your estimates of how things might turn out. It’s also about figuring out your own preferences, your own likes and dislikes.
Decisions that repeat also provide opportunities for choosing things you are less certain about, like a food you’ve never tried or a new TV show, because you don’t get penalized as heavily for taking those gambles. At little cost, you get information in return about your likes and dislikes, and you might find some surprises in there. Whatever you learn will inform all your future decisions. That means that when you do face a high-impact decision, it will be better informed than if you hadn’t done all that low-risk poking at the world.
Have you ever been in a situation where you have a friend who is agonizing over whether to ask someone out on a date and you say, “Just ask them out. This could be the love of your life. The worst that can happen is they’ll say no!” If so, you understand freerolling, even if you’ve never heard the term before.
You can identify decisions with limited downside by asking yourself one or both of the following questions: What’s the worst that can happen? If the outcome doesn’t go my way, am I worse off than I was before I made the decision?
When you pass on such opportunities or let those small, temporary negatives slow you down, you’re magnifying the moment of rejection and ignoring the asymmetry working in your favor.
When a decision is hard, that means it’s easy The very thing that slows you down—having multiple options that are very close in quality—is actually a signal that you can go fast, because this tells you that whichever option you choose, you can’t possibly be that wrong, since both options have similar upside and downside potential.
Instead of taking tons of time trying to tease out the small differences between the choices, reframe the decision by asking yourself, “Whichever option I choose, how wrong can I be?”
The Only-Option Test clears away the debris cluttering your decision. If you’d be happy if Paris were your only option, and you’d be happy if Rome were your only option, that reveals that if you just flip a coin, you’ll be happy whichever way the coin lands.
Part of a good decision process includes asking yourself, “If I pick this option, what’s the cost of quitting?” The lower the cost of changing course in the future, the faster you can make your decision, since the option to quit lowers the impact by reducing opportunity cost.
Amazon founder Jeff Bezos and Virgin Group founder Richard Branson include the concept of a “two-way-door” decision in their decision process. A two-way-door decision is, simply put, a decision where the cost to quit is low.
But being “quitty” allows you to make better choices about when to be gritty.
When you know that you have such a decision on the horizon, consider whether there are lower-impact, easier-to-quit decisions that you can stack in front of the high-impact choice to help inform your one-way-door decision.
Why “Good Enough” Is Good Enough: Satisficing vs. maximizing
There is a big difference between thinking “I am going to fail,” and imagining “If I were to fail, what are the ways in which that could happen?”
Gabriele Oettingen, a professor of psychology at New York University, has conducted over two decades of research showing that anticipating the ways things might go wrong on the path to achieving your goals helps you more successfully reach your destination.
Premortems and Backcasting: Whether you deserve an autopsy or a parade, you should know why in advance
PREMORTEM Imagining yourself at some time in the future, having failed to achieve a goal, and looking back at how you arrived at that destination.
STEPS FOR A PREMORTEM (1) Identify the goal you’re trying to achieve or a specific decision you’re considering. (2) Figure out a reasonable time period for achieving the goal or for the decision to play out. (3) Imagine it’s the day after that period of time and you didn’t achieve the goal, or the decision worked out poorly. Looking back from that imagined point in the future, list up to five reasons why you failed due to your own decisions and actions or those of your team. (4) List up to five reasons why you failed due to things outside your control. (5) If you’re doing this as a team exercise, have each member do steps (3) and (4) independently, prior to a group discussion of reasons.
Research suggests that when you combine mental time travel and mental contrasting, you can produce 30% more reasons for why something might fail.
BACKCASTING Imagining yourself at some time in the future, having succeeded at achieving a goal, and looking back at how you arrived at that destination.
STEPS FOR A BACKCAST (1) Identify the goal you’re trying to achieve or a specific decision you’re considering. (2) Figure out a reasonable time period for achieving the goal or for the decision to play out. (3) Imagine it’s the day after that period of time and you achieved the goal, or the decision worked out well. Looking back from that imagined point in the future, list up to five reasons why you succeeded due to your own decisions and actions or those of your team. (4) List up to five reasons why you succeeded due to things outside of your control. (5) If you’re doing this as a team exercise, have each member do steps (3) and (4) independently, prior to a group discussion of reasons.
You’ll see that the Decision Exploration Table on the next page also includes a column for estimating the likelihood that any of the reasons for failure or success will occur. Because all these things (whether within or outside your control) are not equally likely, it’s useful to include probabilities as part of the forecast. Combined with an estimate of the impact of these unfavorable or favorable events, you will be better able to prioritize your attention to each.
CATEGORY DECISION When you identify a category of poor decisions that will be hard to spot except in the aggregate, you can decide in advance what options you can and cannot choose that fall within that category.
First, identifying bad outcomes in advance can reduce the emotional impact those outcomes will have on your decision-making when they do occur. It changes your frame from “I can’t believe this happened to me” to “This happened but I knew it was a possibility.” When you can reach the latter state in the wake of a bad outcome, you’re less likely to go on tilt. This may be one of the reasons why mental contrasting improves outcomes just as Gabriele Oettingen found, because you come to terms in advance with the fact that things may not work out.
To get high-quality feedback, it’s important to put the other person as closely as possible into the same state of knowledge that you were in at the time that you made your decision.
FRAMING EFFECT A cognitive bias in which the way that information is presented influences the way that the listener makes decisions about the information.
The word “disagree” has very negative connotations. If you call someone “disagreeable,” you’re not saying something nice about them. You might have noticed that I’ve been using the term “diverge” rather than “disagree,” and that’s on purpose. It has a more neutral connotation. Using the terms “divergence” or “dispersion” of opinion instead of “disagreement” is a more neutral way of talking about places where people’s opinions differ, allowing you to better wrap your arms around disagreement.
But like the house flipper, any individual decision might work out poorly. Embracing that fact is necessary for becoming a better decision-maker.