Decision Making
Frameworks for making better choices
All Cards in This Deck
Explanation
Every choice you make automatically eliminates other options. When you choose to spend an hour watching TV, you're not just 'spending' that hour—you're giving up an hour you could have used for exercise, learning, or connecting with family. This hidden cost of giving up alternatives is often more important than the direct cost of what you choose.
Example
Meeting for 1 hour = not shipping code = delayed feature = lost revenue. Keeping $10k in savings account at 0.5% instead of index fund at 10% = losing $950/year. Saying yes to coffee with acquaintance = saying no to deep work = project delayed. Netflix spending $17B on content = not spending on technology = eventually losing to Disney+.
Explanation
Writer Suzy Welch created this rule after making an impulsive decision she later regretted. Our brains are wired to focus on immediate feelings and ignore long-term consequences. This simple question helps you zoom out and see the bigger picture by imagining how you'll feel at different points in the future.
Example
Quitting job in anger: 10 min: Satisfaction, relief. 10 months: Financial stress, regret. 10 years: Career gap hard to explain. Vs Starting exercise: 10 min: Uncomfortable, want to quit. 10 months: Visible results, habit formed. 10 years: Healthy, confident, avoided disease. Bezos leaving Wall Street: 10 min: Terrifying. 10 months: Exciting progress. 10 years: Amazon worth billions.
Explanation
This describes our tendency to continue investing in something because we've already put time, money, or effort into it—even when it's clearly not working. Our brains hate feeling like we've 'wasted' previous investments, so we keep throwing more resources at failing projects. But money already spent is gone no matter what you do next.
Example
Watched 2 hours of bad movie? Those 2 hours are gone whether you watch the last 30 minutes or not. Spent $100k on failing project? That money is gone—don't spend another $100k just to 'not waste' the first. Dated wrong person for 3 years? Those years are gone—don't waste a 4th.
Explanation
Once we form an opinion about something, our brains automatically look for evidence that supports it and ignore evidence that contradicts it. This isn't because we're stupid—it's a mental shortcut that helped our ancestors survive. But it can lead us to make poor decisions because we're not seeing the full picture.
Example
Think coffee is healthy? You'll notice every study saying so, ignore ones saying it's not. Hired someone? You'll notice everything they do right, overlook mistakes. Think product will succeed? You'll focus on positive user feedback, explain away negative.
Explanation
Amazon founder Jeff Bezos realized that most decisions can be undone if they don't work out, but we often treat them as if they're permanent. He calls irreversible decisions 'one-way doors' and reversible ones 'two-way doors.' The key insight: most decisions are two-way doors, so you can afford to move quickly and course-correct later.
Example
Reversible: Trying new job (can quit), moving cities (can move back), new product feature (can remove), dating someone (can break up), most purchases (can return/sell). Irreversible: Having kids, selling company, some surgeries, burning bridges, leaked data.
Explanation
Our memories are unreliable—we tend to remember our predictions as being more accurate than they actually were. By writing down our decisions and predictions, we create an objective record that helps us spot patterns in our thinking. Poker champion Annie Duke and Nobel Prize winner Daniel Kahneman both recommend this practice.
Example
Hired Jane. Prediction: She'll excel at sales, struggle with details. Reality 6 months later: Great at details, struggled with rejection. Lesson: I overweight extroversion. Investment in crypto. Prediction: 50% gain in 1 year. Reality: -70%. Lesson: I'm overconfident in new domains.
Explanation
Psychologist Barry Schwartz found that people fall into two categories: satisficers (who look for options that meet their criteria) and maximizers (who want the absolute best option). His research shows that satisficers are generally happier because they spend less time second-guessing themselves and more time enjoying their choices.
Example
Buying notebook: Satisficer picks first one meeting criteria (lined, $5-10), done in 5 minutes. Maximizer researches 20 options, reads reviews, still doubts choice, wastes 2 hours. Choosing restaurant: Satisficer: 'Is it nearby and rated 4+? Great.' Maximizer: compares 30 places, still regrets choice.
Explanation
This happens when you spend so much time researching and planning that you miss opportunities to take action. While you're still gathering information and weighing options, the world keeps moving. Sometimes the cost of delay is higher than the cost of making a less-than-perfect decision. Analysis becomes paralysis when perfectionism masquerades as thoroughness.
Example
Startup spends 6 months perfecting business plan. Competitor launches MVP, gets customers, iterates. Guess who wins? Developer debates framework for weeks. Could have built the feature in any framework by now. Single person analyzes dating options so long, all options move on.
Explanation
Expected value is a way to evaluate decisions by considering both the potential outcomes and how likely they are to happen. You calculate it by multiplying the probability of each outcome by its value, then adding them all up. This helps you avoid being swayed by either extremely unlikely positive outcomes (like winning the lottery) or extremely unlikely negative ones.
Example
Startup offer: 10% chance of $10M exit = EV of $1M. Steady job: 90% chance of $200k/year × 5 years = EV of $900k. Lottery ticket: 0.00001% chance of $100M = EV of $10 (but costs $20 = negative EV). Insurance: Small certain loss to avoid large unlikely loss = negative EV but worth it if loss would ruin you.
Explanation
When Jeff Bezos was considering leaving his Wall Street job to start an internet company, he used this mental exercise. He imagined himself at 80 years old, looking back on his life. Would he regret not taking the risk? This perspective helped him realize that failure would be temporary disappointment, but not trying would be permanent regret.
Example
Bezos at 80: Won't regret leaving Wall Street bonus. Will regret not trying internet opportunity. You at 80: Won't regret failed startup (you tried). Will regret never trying (what if?). Won't regret leaving toxic job. Will regret staying and wasting years.
Explanation
In Homer's Odyssey, Ulysses knew he would be tempted by the sirens' song, so he had his crew tie him to the mast ahead of time. This is the idea behind precommitment: setting up systems now that will guide your behavior later when you're in a different emotional state or facing temptation. It's about recognizing that future-you might make different choices than current-you wants.
Example
Want to save? Automatic transfer day after paycheck—never see the money. Want to exercise? Prepay trainer—loss aversion forces attendance. Stop procrastinating? Tell everyone your deadline—social pressure ensures delivery. Diet? Don't buy junk food—can't eat what's not there.
Explanation
When facing complex decisions with multiple steps and uncertain outcomes, decision trees help you visualize all the possible paths. You draw out each choice you could make, what random events might happen next, and what outcomes those could lead to. By mapping this out, you can calculate which initial choice gives you the best expected outcome.
Example
Launch product: Small launch (70% mild success → expand; 30% fail → stop) vs Big launch (40% huge success; 60% expensive failure). Tree shows small launch has better expected value. Negotiate job: Accept offer vs Counter (50% they agree; 30% original offer; 20% rescind).
Explanation
The first number or piece of information you encounter acts like an anchor that pulls all your future estimates toward it. Even when that first number is completely random or irrelevant, it affects your thinking. This bias is so strong that it works even when you're aware of it and trying to resist it.
Example
Asked if Gandhi died before or after age 144, then estimate his actual death age—people guess higher than if asked about age 32. Salary negotiations: whoever states first number anchors the entire discussion. Real estate: listing price anchors buyer's perception of value, even for identical houses.
Explanation
Instead of waiting for things to go wrong, this technique has you imagine your project has already failed spectacularly. Then you work backwards to figure out what could have caused that failure. This helps you spot potential problems while you still have time to prevent them, rather than being blindsided later.
Example
Product launch pre-mortem: 'It's 6 months later and our app has zero users. What went wrong?' Maybe we built features no one wanted, had terrible onboarding, or couldn't reach our target audience. Now we can address these risks before launch instead of discovering them after.
Explanation
Losing $100 feels much worse than gaining $100 feels good. This isn't logical, but it's how our brains work. We're wired to be more motivated by avoiding pain than by seeking pleasure. Understanding this bias helps explain why people stick with the status quo even when change would benefit them.
Example
Employees resist job changes even for higher pay because they focus on what they're losing (familiar colleagues, known routine) rather than what they're gaining. Customers won't switch to better products if it means 'losing' their current setup. Investors hold losing stocks to avoid 'realizing' the loss.
Explanation
Groups naturally converge on solutions too quickly because everyone wants to get along and make progress. By formally assigning someone to challenge the group's thinking, you force consideration of alternatives and potential problems. This role should rotate so no one becomes the permanent 'negative' person.
Example
Team wants to launch in December: Devil's advocate argues it's too close to holidays, customers won't be paying attention, support team will be understaffed. This surfaces real concerns that need addressing, even if December launch still happens. Board meeting: one member always asks 'What could go wrong with this strategy?'
Explanation
If you can quickly think of examples of something happening, your brain assumes it happens frequently. Recent, dramatic, or personally experienced events feel more likely than they actually are. This is why people overestimate rare but memorable risks (shark attacks) and underestimate common but forgettable ones (heart disease).
Example
After plane crash news, people avoid flying even though driving is statistically more dangerous—car accidents don't make headlines. Entrepreneurs overestimate startup success rates because they constantly hear about successful companies, not the 90% that fail quietly. People overestimate crime rates in neighborhoods where they personally witnessed incidents.
Explanation
While some choice is essential for happiness, too much choice can be paralyzing and make us less satisfied with whatever we choose. Psychologist Barry Schwartz found that when faced with too many options, people either avoid choosing altogether or constantly second-guess their decisions.
Example
Grocery store with 300 jam varieties vs. 6 varieties: people are more likely to buy from the smaller selection and more satisfied with their choice. Dating apps with unlimited options make people less likely to commit. Restaurants with huge menus often have lower customer satisfaction than those with focused offerings.
Explanation
Our emotional state heavily influences decisions, but emotions are temporary while decisions often have lasting consequences. Time allows intense feelings to fade and gives your subconscious mind a chance to process information. Many breakthrough insights come after stepping away from the problem.
Example
Angry email: Writing it feels great, but sending it ruins relationships. Save as draft overnight—you'll often delete it. Job offer: Initial excitement or fear shouldn't drive such a major decision. Sleep on it, then reassess with clearer thinking. Major purchases: '24-hour rule' prevents impulse buying you'll regret.
Explanation
We have a strong preference for the current state of affairs. Change requires mental energy and involves risk, while staying the same feels safe and effortless. This bias keeps us in mediocre situations longer than we should and makes us resist potentially beneficial changes.
Example
People stick with bad jobs, ineffective routines, or underperforming investments simply because they're familiar. Software users resist updates even when they improve functionality. Organizations maintain inefficient processes because 'that's how we've always done it.' Default retirement plan settings have huge impact because most people never change them.
Explanation
This classic technique forces you to consider both sides of a decision systematically instead of just going with your gut feeling. The act of writing things down often reveals considerations you hadn't thought of and helps you see which factors are actually most important to you.
Example
Job decision: Pros of new job (higher pay, better growth, new challenges) vs. Cons (longer commute, unfamiliar team, more stress). Move to new city: Pros (adventure, career opportunities, lower cost) vs. Cons (leaving friends, starting over, unknown risks). The list helps clarify what matters most.
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