Two things shape the course of your life: luck and your decisions (with Annie Duke)

1. Prioritize Decision Quality

Focus on improving the quality of your decisions, as this is the only factor you can control that significantly determines your life’s outcomes, apart from luck.

2. Calculate Expected Value

For important decisions, explicitly calculate the expected value by multiplying the probability of each outcome by its payoff (positive or negative). This makes your forecasts examinable and improves learning from results.

3. Make Forecasts Explicit

Always make your forecasts about future outcomes explicit, rather than relying on implicit gut feelings. This allows for objective examination, external input, and better feedback loops to improve future decisions.

4. Separate Decision from Outcome

Avoid “resulting” by not judging the quality of a decision solely based on its outcome, as luck significantly influences results. This prevents misattributing success to skill or failure to poor decisions, which can skew future resource allocation.

5. Tackle “Monkeys” First

In projects, identify and address the biggest unknowns or bottlenecks (“monkeys”) before investing in known, easier parts (“pedestals”). This prevents wasting resources and makes it easier to quit if the core challenge is intractable.

6. Avoid Low-Hanging Fruit First

Resist the urge to start projects by tackling “low-hanging fruit” (easy wins). Instead, prioritize solving the most critical, uncertain challenges first to avoid creating sunk costs that make quitting difficult later.

7. Overcome Sunk Cost Fallacy

When deciding whether to continue an endeavor, only consider future costs and benefits, ignoring what has already been invested. This helps avoid throwing good resources after bad and enables timely quitting of failing ventures.

8. Recognize Omission-Commission Bias

Be aware of the bias where losses from inaction (omission) are tolerated more than losses from active choices (commission). This can lead to sticking with suboptimal situations to avoid the perceived greater “loss” of making a change.

9. Quantify Status Quo vs. Change

When contemplating a change versus sticking with the status quo, explicitly calculate the expected value of both options. This objective comparison helps overcome omission-commission bias and reveals if a change offers higher expected value.

10. Use Probability & Magnitude

Go beyond simple pros and cons lists by considering the magnitude and probability of both potential gains and costs for each option. This provides a more accurate understanding of the true weight of each factor.

11. Reject Flat Pros/Cons Lists

Do not rely on simple pros and cons lists for important decisions. They amplify cognitive biases by failing to distinguish the magnitude or probability of different factors, leading to potentially manipulated outcomes.

12. Manage Risk of Ruin

For high-stakes decisions or those with significant volatility, consider the risk of ruin and adjust your strategy (e.g., using a fraction of the Kelly criterion). Maximizing expected value alone might lead to catastrophic losses if you can’t withstand the downside.

13. Decide Quickly on Small Bets

For low-stakes decisions with minimal risk of ruin, make choices quickly once a positive expected value is determined. Avoid paralysis by analysis and save your cognitive energy for more impactful decisions.

14. Employ Sorting and Picking

Structure your decision-making into “sorting” (identifying acceptable options) and “picking” (choosing among the acceptable ones). The picking process should always be fast once options are deemed “good enough.”

15. Tailor Decision Time to Impact

Adjust the time and effort spent on evaluating options based on the decision’s impact and optionality. High-impact decisions warrant more thorough sorting, while low-impact ones should be resolved swiftly.

16. Embrace “Hard Decisions are Easy”

When a decision feels hard because you have multiple equally good options, recognize that the options are likely so similar that a quick choice (even a coin flip) is effective. Overthinking small differences is often unproductive.

17. Review Decisions Without Outcomes

When analyzing past decisions, particularly in a group, discuss the information available and the reasoning before revealing the actual outcome. This practice, common in poker, helps avoid hindsight bias and promotes objective learning.

18. Assess Outcome Informativeness

Understand that a single outcome is highly informative only when skill heavily dominates luck (e.g., chess) or when aggregated over many iterations. Avoid drawing strong conclusions from single outcomes in high-luck scenarios.

19. Recognize Heuristic Breakdowns

Be aware that mental shortcuts (heuristics) can break down in “edge cases” or when real-world conditions differ from those in which the heuristic evolved. This helps identify situations where deeper analysis is needed to avoid errors.

20. Advocate for Decision Education

Support and promote the integration of decision-making education into K-12 curricula, teaching concepts like probability, values, and goal-setting. This foundational skill can significantly improve individual lives and society.