How to Decide

Following up on her bestselling book Thinking in Bets, Annie Duke’s new book How to Decide makes good on its promise of “Simple Tools for Making Better Choices.”  This is a workbook of sorts filled with reader exercises and space to write in your work.  Readers can get a lot out of this book by just reading through it, but they’ll get more if they try some of the exercises.

A necessary part of improving decision making is avoiding common types of mistakes.  But we tend to believe that while others make these mistakes, we don’t make them ourselves.  Duke does an excellent job of illustrating different types of mistakes and persuading readers that we make these mistakes too.  Perhaps a critical part of getting readers to understand their own failings is that Duke characterizes them as normal human tendencies rather than “mistakes” or “failings”.  Whatever we call them, it’s apparent that avoiding them requires mental effort and building new habits.

A common problem with the way we judge past decisions is that we are overly influenced by the way the decision worked out.  Some good decisions work out badly because of bad luck, and some bad decisions work out well because of good luck.  We see this in sports.  While the football was in the air during a last second field goal attempt to decide the game, the teams were well matched and played a great game.  But the second we know who won, the winning team played a brilliant game in all respects, and the losing team made numerous unforgivable mistakes throughout the game.

Another common problem with the way we think is 20/20 hindsight, or the tendency to see past events as inevitable.  Somehow we go from having no idea what will happen to having known all along what was going to happen.

One part of the book gently persuades the reader to try to assign numerical probabilities to possible future outcomes from a decision.  Not surprisingly, many people respond with some variant of “I have no idea.”  But Duke does an excellent job of explaining that we almost always do have some useful information.  She takes the reader through a series of steps to make even the innumerate more comfortable with assigning probabilities.

A tool most people know for making a decision is a pros and cons list.  Duke explains the many ways that such lists lead people astray.  She teaches ways to remove biases from decision making, but “if you wanted to create a decision tool to amplify bias, it would look like a pros and cons list.”

You might think that being smarter would help in making better decisions, but this isn’t always true.  “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.”

One challenge with personal decisions is that we are stuck with our “inside view.”  The way we see ourselves in the world may not match reality.  To make better choices, we need to seek out an “outside view.”  But, “if you want to know what someone thinks, stop infecting them with what you think.”

The first three-quarters of the book is useful to individuals, and the later chapters shift to group decision making within organizations.  One problem not addressed is personal agendas.  I’d be interested to know how the group decision making techniques fare when one or more members of the group have something to gain from a particular choice and don’t care what’s best for the organization.

Overall, I recommend this book as a way to understand your own tendencies better.  I challenge readers who think they have no problem with the way they make decisions to maintain this attitude after reading How to Decide.