“The quality of our lives is the sum of our decision quality plus luck.” — Annie Duke
The future is uncertain, and we all have beliefs about what’s to come. Whenever we make a choice, we are betting on a potential future based on our beliefs.
We wager that in the future, the return on our decisions will be greater than what we are giving up right today.
The more we recognize that we are betting on our beliefs (with our happiness, health, money, time, or other limited resources), the more we are likely to question those beliefs.
This helps us make better sense of the risk involved in our decision-making so we can be less vulnerable to reactive emotions, biases, and destructive habits.
Instead of focusing on being sure, we should try to figure out exactly how unsure we are and make our best guess at the chance of different outcomes occurring. In this way, we shift our thinking from a need for certainty to accurately assessing what we know and don’t know.
What makes a decision great is not that it has a great outcome. Great decisions can have bad outcomes, and bad decisions can have good outcomes. A great decision is the result of a good process.
Use this simple process from Annie Duke's book 'Thinking in Bets' to make better decisions:
• Define the bet and your potential reward
• Think of the likelihood of you getting that reward
• Get clarity on the investment and opportunity cost
• Calculate the expected value
• See if it’s a good bet or a bad bet