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How to think under pressure
Incomplete information and over-estimation
- Much of what you need to know in life is hidden from you. You need to make decisions, but is still the victim of chance or uncertainty.
- We tend to over-estimate the role of our own skills. The more people overestimate the importance of their own ability, the less flexible their decision making becomes.
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Key Ideas
Incomplete information and over-estimation
- Much of what you need to know in life is hidden from you. You need to make decisions, but is still the victim of chance or uncertainty.
- We tend to over-estimate the role of our own skills. The more people overestimate the importance of their own ability, the less flexible their decision making becomes.
Thinking probabilistically to avoid overestimating our abilities
To avoid the trap of overestimating our own skill, we need to start thinking probabilistically. That means estimating the odds and adapting your decision-making accordingly.
Even if the decision had a good outcome, we still need to objectively analyse the quality of the decision-making underneath.
Learn to deal with tilting
Tilting means realizing that your emotions are not separate from the logic of your decision making - for example, the despair that comes from bad luck, or the overconfidence that comes from a win.
You can learn to cope better by regularly checking in with yourself to see what you are feeling and how you react. Once you have identified those feelings, then try to analyse how they're influencing your judgment.
The value of accepting the unknown
A poor understanding of good or bad luck can derail the decision making of bankers, judges, and athletes. Being aware of probability will prevent you from reading too much into random events, or 'spotting' trends when there are none.
In the current pandemic, where governments design policies based on limited data, we could all do with a better understanding of uncertainty and how to think about it under pressure.
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Gambler’s Fallacy
The odds are always fifty-fifty. But most of us anticipate better odds, or better luck, after a bad streak, as if now we are due for good luck.
This ‘Gambler’s Fallacy’...
The Biggest Bluff
Maria Konnikova, in her soon to be published book The Biggest Bluff, tells us that Poker is a real game, closer to life as opposed to the modern games which try to ‘game’ our brains’ and exploit its weaknesses.
Poker pushes us out of our comfort zones and illusions and puts us where life is, unpredictable, and always with fifty-fifty odds.
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Key Ideas
Separate decision quality from results
People have a natural tendency to conflate the quality of a decision with the quality of its outcome. They're not the same thing.
You can make a smart, rational choice but still ...
Luck and Incomplete Information
Why don't smart decisions always lead to good results? Because we don't have complete control over our lives — and we don't have all of the information.
You can opt not to drink on New Year's Eve, for instance, but still get blindsided by somebody who did to drink and drive. You made a quality decision, but happenstance hit you upside the head anyhow.
Thinking in Bets
Becoming comfortable with uncertainty and not knowing is a vital step to becoming a better decision-maker.
What makes a decision great is not that it has a great outcome. A great decision is the result of a good process, and that process must include an attempt to accurately represent our own state of knowledge.
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Key Ideas
Systematic approach
Having a systematic approach to how you deal with problems, as opposed to just going by gut and feelings, ca...
Study the problem first
Detectives and investigators use the process. They ask both obvious and unthinkable questions.
Get close and collect information about how the problem is manifesting. Understand where the problem does and doesn’t happen, when the problem started, and how often the problem occurs to generate critical insight for the problem-solving effort.
Question for great answers
- Don’t look for solutions immediately; Keep redefining the problem until you arrive at the root cause.
- Don’t try to guess the solution; try to understand how the obstacles, or challenges manifest first.
- Gather data to analyze all potential root causes.
- Consider all options, regardless of how irrelevant they currently appear.
- Find a way to connect the dots. Make better analogies. One good analogy is worth three hours of discussion.
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