Afford Anything - The Art of Decision-Making, with Annie Duke

Episode Date: October 14, 2020

#281: Annie Duke, best-selling author of Thinking In Bets and former world champion poker professional, discusses the decision making strategies and tools outlined in her new book, How to Decide. Learn how to make quicker decisions, overcome hindsight bias, make decisions with incomplete information, and improve your decision making skills. For more information, visit the show notes at https://affordanything.com/episode281 Learn more about your ad choices. Visit podcastchoices.com/adchoices

You can afford anything, but not everything. Every choice that you make is a tradeoff against something else, and that doesn't just apply to your money. That applies to any limited resource that you have to manage, like your energy, your attention, your focus, your time. And that opens up two questions. Number one, what matters most? And number two, how do you make decisions that reflect that? Answering these two questions is a lifetime practice. And that is what this podcast is here to explore.

My name is Paula Pant. I am the host of the Afford Anything podcast. And speaking of that second question, how to make better decisions, decisions that reflect your priorities. We have with us today an expert in decision making, former professional poker player, Annie Duke. Annie is here to discuss a topic that almost everyone can resonate with, which is, you know how there are times when you beat yourself up because of a decision that you made in the past? And you tell yourself, man, I should have seen it coming. I should have known. Annie is here to discuss why that is fallacious thinking and what we can do, starting today, to make better decisions in the future and to make our decision-making process more explicit, more thoughtful, and more of truly a process.

Annie honed her skills as a decision-maker during her career as a professional poker player. She holds a World Series of Poker Gold Braclet, and for many years was the leading female. money winner in the World Series of Poker. She has authored or co-authored multiple books on poker strategy and has appeared on a number of TV shows, including the Kobe Report, Celebrity Apprentice, and Deal or No Deal. Through poker, she honed her decision-making skills and went on to serve as a board member for the Decision Education Foundation, a nonprofit based in Palo Alto, which provides training on producing curricula focused on decision-making skills. She is the founder of a nonprofit called How I Decide, a nonprofit that helps young people develop decision-making

and critical thinking life skills, and works as a decision strategist with a number of companies and organizations. She is the co-founder and former commissioner of the Epic Poker League, and she studied cognitive psychology at Columbia and the University of Pennsylvania. Her newest book, which is called How to Decide, blends her poker expertise and her cognitive psychology research and contains a series of tools that anyone can use to learn how to make better decisions. In this episode, Annie explains why it's futile to aim for perfect decisions and talks about what we should aim for instead and the specific strategies that we can use to improve our decision-making skills. So with that said, here is Annie Duke on The Art of Decision Making. Hi, Annie. Hi, how are you? I'm excellent. How are you doing?

I'm good. Sad that summer's over. Oh, I know. But, excited that 2020 maybe is going to be over soon, even though that doesn't necessarily tell us anything about what's in store for 2021. Yes, that's what I would say. Don't assume that just because it's bad now, it can't get worse. But it can get better too. So we've got that going to. Anything is possible. And that is a perfect segue to today's conversation because I wanted to talk to you about how to make decisions. And as you observe, a decision is fundamentally a prediction about the future. So this conversation that we're going to have is how do you predict the future, given that the future is impossible to predict? Yes. So what I would say is that it depends on what you mean by predict. If what you mean by predict is that you will somehow, you know, have a crystal ball that gives you the exact answer, then yes, that is generally pretty impossible. But that does not mean that it's impossible to predict. If you think about what is the value of seeing into the future, it's to get a better idea of the way that things might unfold for you. And even if our crystal ball is cloudy,

A cloudy crystal wall is better than none at all. In other words, it gives us some hints into what might happen, even if we can't get it exactly. Maybe the analogy that I would use here is there's a really big difference about the way we behave in terms of whether we take an umbrella out with us. If the forecast is 2% chance of rain, then if it's a 95% chance of rain. And obviously, if it's a 95% chance of rain, most of us will bring an umbrella. And if it's a 2% chance of rain, most of us won't. It kind of helps us navigate that decision, even though, you know, a 95% chance of rain, obviously by definition doesn't mean that it will always rain. So sometimes you'll have the umbrella even though you didn't actually use it. And a 2% chance of rain doesn't mean it will

never rain. So very occasionally, it will rain even though you don't have an umbrella. But we can all assume that we're better off for having kind of a clearer, if not probabilistic view of what might happen in the future. And that's really what we're trying to do. And in that sense, the future is really not at all impossible to predict because we can always get some view into the future and whatever view we get into the future is going to make our decisions better. So would it be accurate to say that for our purposes, the most useful way that we might want to use the word prediction is thinking probabilistically? Oh, for sure. I hope that really comes across in my book really well. So the reason why it's so incredibly useful is because it's what is true

of our ability to see things. So I would just make the argument, which I think is somewhat axiomatic, that the closer you are to what's actually true of the world, the better your decisions are going to be. Given our limitations as human beings, both in terms of what we know, right? Our knowledge is imperfect,

but also even if we did have perfect knowledge, the intervention of luck, what that means is that our view of the future, the appropriate way to view the future, would be probabilistic in nature, because it hasn't occurred yet. So you can think about, like, even if you have perfect information, like I've examined the coin. And I can see that there's a heads and a tail side.

I know exactly how often it's going to land heads and how often it's going to land tails. But I never know for sure that it's going to land heads or tails. I just know the frequency with which that's going to happen. So that's probabilistic in nature. And that's in a case where I have perfect information. When we start to layer in imperfect information, obviously, then you're, you're, you're, beliefs become probabilistic, like whether they're true or not has some probability associated with them. So I just feel like the only way to become a good decision maker is to kind of embrace that and to say

there's a lot of uncertainty. There's lots of different ways that the future could turn out. And what my job is is essentially to do two things. Try to as well as I possibly can identify those different futures that might unfold that could come to be. But also on top of that, try to identify as best as I can, the probability at which those futures will actually occur. And if you're not doing that in an explicit way, I don't know that you can really be improving your decision. And when I say like you have to be explicitly thinking about probability, the reason that I say that is that you're implicitly doing it already. So generally, when we make something explicit that was implicit, we're usually going to be better off. So if you think about it, if you're, you know,

looking at a menu and you're trying to decide between ordering the chicken or the fish, and you decide on the chicken. Implicit in that decision, it's not that you are 100% sure that you're going to like the chicken better than the fish. How could that be? You haven't experienced those dishes before. It's that you're saying that more often than not, I will like the chicken better than the fish. It is just more likely that that will be the dish that I will enjoy. So that's already implicit and even a very simple decision like that. So we want to make it explicit because it's already included in our decision process anyway. What is getting in our way? How are we getting in our own way? So basically, I think there's two reasons. The first, and we can circle back to this,

is that I think that people inherently think that if they don't know the right answer, where to go way back to what we talked about initially, in other words, if it's not like in the two plus two equals four category, so that they know that whatever they think might occur might not actually happen, they might not get it exactly right if we think about it like a mathematical equation, people will usually sort of throw their hands up and say something like I'd just be guessing anyway. And then they kind of punt the problem and make the decision without actually going through any explicit process around that. So we can come back to that later because that's actually a really interesting problem.

And addressing that problem is part of solving for becoming a better decision maker. But the second issue I think is this is that the way that the world works, naturally there's only one way that the future ever unfolds. That's just the nature of time, right? So it doesn't matter when I make a decision. There's all sorts of different ways that can turn out. It only turns out one way. And then what happens is that when we look back at the decision in retrospect,

it feels like a couple of things are going on. One is that we get into this hindsight bias where we feel like that was sort of the only way that it could have turned out. We sort of lose sight of the fact that there's all sorts of different ways that the world could have unfolded. And we think that this is the way that it must have unfolded, and therefore it must have been knowable. And then the second problem, of course, is the resulting problem,

that then once we know the outcome, we use that to go back and try to decide whether the decision quality was good. So basically, you can think about it, like, when we think about resulting in hindsight bias and how that sort of causes a ruckus and then causes this ruckus that happens prospectively, we should be sort of standing at the base of a tree and seeing all the different branches

and making our decisions that way. But the way that our mind works is that mostly we're thinking retrospectively. And once something occurs the way that it does, once the coin lands heads, as opposed to the tail, we kind of take this cognitive chainsaw and we like lop off all the other possibilities because there's only one past. And I think the strength of there being only one past makes us feel like that's the thing that we should always be able to predict. And then what happens is because we know there's going to be only one.

one answer, only one way that it turns out, that we should be able to predict just that one thing. And so that's what we try to focus on is sort of getting the right answer. And if we can't, we punt. Then in retrospect, because we only have one pass, that then reinforces that idea. And so we sort of think that we're supposed to be able to think about this one sort of line of history, one line of the way that things turn out. I don't know if that makes sense. Yeah, that absolutely makes sense. I mean, time is linear. I'm choosing between the chicken or the fish. I decide to order the chicken. There are a variety of possible outcomes. I might love it. I might like it. I might dislike it. I might hate it. Let's say those are the four possible outcomes. But then time passes. One of those four outcomes comes to fruition. And because only one comes to fruition, I then experienced that No-It-all syndrome where I think I should have known it all along. Of course I would have hated it. And I find all kinds of justifications for why I should have known that. Right. And then because that's the way that we experience time, in order to make a decision, you have to have figured out exactly how the future is going to unfold. In other words, you have to have to have figured out just what the branch is that will occur. Right. So it ends up sort of reinforcing itself because of course, you can't know. I mean, absent omniscience in a time machine, you can't know how it's going to turn out. But I think that that's what we feel like decisions are, right? I'm trying to choose an option and that I should know exactly how it's.

turns out. And then what happens is that once we know how it turns out, that then reinforces the idea that we should have known how it turned out because of course it becomes really obvious. You know, I think in the book I liken it to, if you're thinking about the branches of a tree, you can imagine like things that are really probable as like big thick branches and things that are really improbable as like little tiny twigs, right? And that's the way that we should be viewing the world. The problem is that once we know what happened, that even the tiniest of twigs adds to the trunk, which is like that one pass. So it gets blown up and like our kind of like cognitive landscape, right, sort of taking up all of our cognitive visual field. It's like,

oh, well, obviously that's what was going to happen. We should have known. And that's kind of what we think that we're doing when we're making decisions is figuring out exactly how it will turn out, which of course is impossible. Right, because if we fall into the trap of thinking that A will lead to B and only B, and we discount the possibility that A might lead to C or D or E or F, and, then we are extrapolating that linear view of the past and superimposing it on our perception of the future. Exactly. And you can see how that leads to resulting, right? Because if those things are connected in that way and the way that you just so beautifully describe, then when we have an outcome, good or bad, clearly a good outcome had to come from a good decision and a bad outcome had to come from a bad decision because we sort of think that wrapped up in the decision process would be a one-to-one relationship between the outcome that actually occurs, that this was. the thing that had to have happened. So all of a sudden, the outcome actually casts a shadow over our ability to see any of the different ways that the world could have unfolded, what we'd

call counterfactuals. And that's how you sort of enter into those cognitive biases that then reinforce kind of the bad decision-making prospectively. So we have this interaction between the retrospective and the prospective. And you make the point in your book that because of resulting and because we assume that a bad decision leads to a bad outcome and a good decision leads to a good outcome, that thinking, in terms of its many shortcomings and its many problems, one thing that comes from that is that we lose compassion. We lose compassion for both ourselves and for others. Well, yeah, because, I mean, we're all just kind of casting about, right? Like, there's a lot of luck, and we only know what we know.

And the thing that we definitely don't know is what the end outcome is going to be, because that would require time travel or a crystal ball or some supernatural power that we don't have, what happens because these biases are so strong, you know, when something doesn't work out, it's just so clear that it was because we're stupid because how could we not have known? How could we not have seen that coming? We do that to other people all the time. You know, I open, you know, thinking about my previous book with, you know, the story of Pete Carroll who calls the last play of the Super Bowl in 2015. And the result of that play is something that's going to occur less than 2% of the time, which is the ball is intercepted to end the game

and the Seahawks end up losing. Now, this is something that's going to happen to less than 2% of the time. And when you actually look at that decision and people can go read that literally the first section of the first chapter of that book to see a description of why, but just trust me on this for sake of time, it's actually a very good decision that he made. And you can sort of get a hint into that. Like if an interception is going to occur less than 2% of the time, you can kind of go with like how bad could it be. but people are still talking about that five years later as one of the worst plays in the history of the Super Bowl.

How could Pete Carroll have been so dumb? What a stupid decision on his part? And you can see that we're not allowing any room for the idea that maybe he just had bad luck. Maybe it wasn't such a bad decision after all. Maybe we should not put this to his own disposition, like his own ability to make decisions. And we should allow that sometimes bad things happen for no reason that has to do with anything that, you know, you have control over in your own life. And we do this to ourselves and we certainly do this to other people. So that's kind of like the resulting thing. And then the hindsight bias is just

like, you know, how could you not have known? How could you not have seen it coming? The question should be, how could you possibly have known? How could you possibly have seen it coming? Unless we're talking probabilistically, right? It's like nobody can see something coming for sure. Nobody could have known for sure. And when we act that way toward other people, how can we have compassion for them? how can we allow that they may have been doing their best? They may have made a very high quality decision. And on top of that, even if the decision wasn't so good, that's great because now you've learned some new things and you can become a better decision making going forward.

Instead of pointing fingers and being like, oh, you're such an idiot because you didn't see it coming. It's not just that we do this to other people. We do this to ourselves as well. Right. Beat ourselves up about decisions that we've made in the past. Yeah. that flip side is true too, which may not seem like you're lacking compassion for yourself,

but you are, which is when good things happen, we also do the reverse, which is we say, I knew it was going to turn out this way. And I made such a great decision to have this amazing outcome occur, you know, as if, you know, I'm sitting in an intersection and I'm reading like the world's most interesting tweet. And so I don't happen to see that the light turns green. And so I do not proceed into the intersection, which we should all agree is a very bad application of any kind of driving skills. Like I'm not, I'm not being a good driver there. And it turns out that a semi comes through that intersection and would have hit me, right? It doesn't make me a genius for reading

Twitter at an intersection. Now, it seems obvious in that particular case, because like I gave you a really obvious situation, but you can think, you know, people who have like a lot of success in sales or success in business or one startup that fails versus one that succeeds and so on and so forth, we can see where once we could make the details a little bit murkier, that what we tend to think is that the people who have successful startups were geniuses and the people who failed were somehow idiots. But when we think about how we own those successes, we're also being unkind to ourselves.

Because if that success is coming from whatever the equivalent is of, I was reading Twitter at an intersection and just got super lucky, and I now think I'm supposed to just sort of like own that success and that I should now be, I guess, reading Twitter at every intersection, I'm going to not have a good life. So what's happening is that while I'm sort of accepting that good feeling in the moment of saying like I had this amazing thing happen because I'm a great decision maker, I'm being very unkind to future me. Like all the future versions of me that could have learned not to read Twitter at the intersection. But now I'm not allowing myself that opportunity. It occurs to me as we talk, and you outline this in your book as well, that there is what happens prior to when a decision is made, which is that we gather information and use that information to think probabilistically. And then after the decision is made, that's when the role of luck steps in.

We can think about these two sources of uncertainty as intervening in different places in the decision process. So once you choose an option, I'm going to have the chicken. that's where the intervention of luck occurs. So basically you can think about when I choose an option, what I've done is I've chosen the set of possible outcomes that could happen and the probability that they will happen at. But what I have not done is chosen the actual outcome that will occur. Luck chooses that. So if I choose a play, a football play, that's going to result in an interception 2% of the time. but I do not know on this particular time whether an interception will occur or not.

I just know over the long run, I'll see it 2% of the time. Luck is deciding whether on this try. Like, same thing with flipping a coin. I know half the time I'll see heads, half the time I'll see tails. Luck is what determines which one I actually see. So that's where luck is intervening. Now, what gets us to sort of choosing an option? And this is where we see the intervention of hidden information.

So I have some set of beliefs, knowledge, facts, things that I think are true of the world, my models of the world. And those inform the whole decision process. They inform what are my goals, what are my values, what are my preferences, what options do I think are available to me? What resources do I have to invest in those options? And then this is the interesting thing, a little bit meta. For any option that I'm considering, it's my models of the world, my beliefs about the world, that determine what I think those outcomes are and the probability. at which those will occur. So it is my belief that if I have a fair two-sided coin, that I will observe heads 50% of the time entails 50% of the time. That's because I have a

model of the world that tells me that. So this is where we can see the intervention of hidden information, which is there may be things about the coin that I don't know. Or I may be inaccurate in my assessment that a fair coin lands heads 50% of the time entails 50% of the time. So there's kind of two things that go wrong with our beliefs. One is that some of the things that we believe are inaccurate. And the other is that we just don't know a bunch of stuff. And you can see how that is with any decision that you make, right? Like if you go into a negotiation, for example, you don't know what the other person's

bottom line is generally. You might have beliefs about what that person's bottom line is. But, you know, they're not going to be like perfect. They're not going to be exactly what that person's bottom line is. you may have beliefs about what you think that their values are, what it is that you think their goals are in the negotiation. And those could be more or less correct, meaning sometimes they're going to be more correct and sometimes they're going to be less correct. They're going to be closer to what they actually are or not. There may be inaccuracies in there.

There's just a bunch of stuff you don't know when you walk into that room. That's pretty much true of anything that you're trying to decide about. There's just a lot of stuff that you don't know that you're sort of building the rest of this decision process on top of. Given that we don't know what we don't know, how do we know if we have adequate information to start assessing the range of potential outcomes? That's such a good question. So you can always start. And what's interesting is that the process of starting is usually what gets you to start gathering more information. Because the process of starting inherent in that is a question, right? What are the possible outcomes? What are the probabilities with which those occur? And,

When you start asking those questions, you start saying, well, what do I know that would help me figure this out? And then what could I go find out that would help me figure this out? So what I think is interesting is that a lot of people don't start the process because they say, how could I possibly know? I don't know enough stuff. But it's the actual starting of the process that gets you to start to know that stuff, to get you to start to look for that kind of information.

The demanding of yourself to take a stab to make an educated guess makes you try to figure out how you can get more educated into that gas. Because there's just a question implied. That's kind of number one is the process gets you to actually improve your knowledge. It gets you hungry to go fill in those gaps that you're aware exists. That's kind of number one. Number two is it starts to get you to seek feedback from other people and to try to figure out what's true of the world in general, which is incredibly helpful in terms of helping you to expand your understanding of what a reasonable outcome is or what your options might be or what the probability that things will happen, you'll start to try to get feedback from other people again, because inherent in this process

is this question. Like, how can I become more educated on this topic? Like, what are the things that I could go find out and that I could know? And the last thing I would say here is that I think that we need to accept that any decision that you make outside of things that are much more objectively known in nature like a mathematical equation, which is not what we're talking about here because we're talking about subjective judgments. Any decision that you make is going to be made within complete information. You know, you just have to make sure that whatever the time was that was reasonable for you to make the decision that you did your best to make sure that you maximize the amount of information that you could gather in that time. And then understand that when you make the decision, you're not going to be

sure. You're never going to be 100%. Certainly not about what the outcome is that's going to occur, but also understanding that you may learn new things later where if you had known them, you would have made a different decision, but it's okay because you didn't know them. And so you just get better as you go along. And I think that we have to have a lot of acceptance for that. Mostly you're going to be making decisions where you're kind of making your best educated guess, but you're not making a decision to try to get the right answer, that that's not a particularly healthy or helpful way to think about decisions.

How do you know, given the fact that you learn as you go along, you start assessing the range of potential outcomes. And as you do so, you continually gather more information in the process of assessing that range. How do you know when it's time to make that final call? Such a great question. So I'm going to give you three-part answer. So let's take these in turn. Part number one is, what's your time limit? That's the easiest way to think it, because what we need to realize is that when we don't make a decision,

decision there are costs to that because what you're saying is that whatever the path that you're on is a path that is fruitful enough that not changing course would be okay. So a lot of decisions sort of have an expiration date. Like if you don't take the opportunity, if you don't do something, the opportunity will expire, it will go away. Or the path that you're on is you know is going to turn out really poorly. You need to act with speed in order to get off of that course. and you'd rather get off of that course onto a course that might be not so certain because you have certainty the course you're on isn't any good. The first question to ask is, is there just a time limit?

Like how fast do you need to act? That's the first thing that you need to think about. The second thing you need to think about is what type of decision are you facing? So this is actually the most important and most fertile ground to explore. But time is a valuable resource, right? Like we have a limited amount of time to be doing things in our lives. And we want to think about, as we think about allocating our time, that's an investment in of itself.

And we want to make sure that we're investing time in this sense, gathering information, right? And thinking about the decisions that really matter and not worrying so much about the constant trying to get lots of information about decisions that probably don't matter so much. How can we figure out whether decisions matter or not? Well, the first has to do with thinking about just generally what is the impact. of having a bad outcome. So, like, if we go back to the chicken and fish example, so let's imagine, Paula, that you ordered the chicken and it was bad.

You didn't like it. So now let's say that I catch up with you in a year. And I say to you, hey, how's your year been, right? It's not 2020. Right. Right. And I ask you, like, I say, hey, how's your year been? And your answer is, like, pretty great.

Or maybe your answer is, like, not so great. I don't know. Your year is your year. And I say to you, this is a year later. I say, hey, do you remember a year ago when we had that meal and you ordered the chicken and it was kind of icky? What impacted that have on your happiness over the course of this last year? What do you think your answer would be?

Assuming the chicken did not make me violently sick, my answer would be that it had no effect. What if it may do violently sick for two days? Violently sick for two days followed by a complete recovery? Still no effect. Yeah. Exactly. So what if I catch you after a month? Does it have any effect on your happiness over the course of a month?

you had a kind of mediocre meal? No, even sick for two days one month later would not have an outsized impact on the month. Exactly. So maybe sick for two days, I catch you in a week. It matters, right? But if you weren't sick for two days, if the meal was just bad, I don't think it even affects you in a week. Right. Exactly. So this is what I call the happiness test. And it's actually a really good test to apply to get yourself out of analysis paralysis. So we've been talking a lot about like asking questions and gathering information, but we want to be very judicious about where we spend the time doing that. And we want to do it for decisions that actually matter. What's really interesting is that we tend to get it flipped. So for things like what to watch on Netflix, what to order

in a restaurant, what to wear, we spend about six to seven work weeks a year on those decisions. Seems excessive. So like a restaurant, I think the average is about 14 minutes to decide what to order. And obviously these decisions, what we just uncovered through the happiness test, which is just saying, like, in a year, is this really going to have affected my happiness? Is that whether it turns out poorly or whether it turns out well, even if it was the best meal you, you know, you've had, it's not going to affect your happiness in a year, that these really don't have any longer term impact on how your life turns out, like whether you're reaching your goals or not. And I use happiness, you know, just sort of as a proxy of are you meeting your goals? because I think we're generally happier when we meet our goals. So once we sort of realize, okay, this is the type of decision that isn't going to have much of an impact in the long run, we should just go pretty fast. You know, just divide the menu into stuff you like and stuff you don't like and then flip a coin after that.

And don't spend the time. I mean, we all have that friend, right, who's like asking everybody at the table and asking the wait staff and like wants to meet the chef and has read every review of every dish on yelp. Right. And it's like, really, I think it partly goes back to what we. we were talking about in the beginning, which is this idea that when the chicken comes back, you feel like you chose wrong. You feel like you should have known. And then now of a sudden, we're spending all this time that I guess we could be talking to the people that we're eating with, right, and actually enjoying their company in this horrible analysis paralysis with like all this

anxiety about what dish we're going to eat. When if we did the happiness test, we'd realize it doesn't much matter in the long run. So that's kind of number one is if it's a decision that's pretty low impact and it's not going to have a lot of effect in the long run, you don't want to take a whole lot of time with it. If it is high impact, that would be a sign that you might want to slow down. Take more time. That's the first piece. The second piece has to do with optionality, which is one way to kind of mitigate the effects of a bad thing happening, are if you can quit and go choose to do a different thing. The easier something is to quit, the less time you really need to take with the decision. The classic example would be, I'm going to take a lot more time and

try to gather a lot more information about somebody that I'm married than somebody who I'm going to go out on a first date with because marriage is it's hard to unwind right like it's hard to quit a marriage stuff that goes along with that but quitting a date you know how many of us have had friends like call in the middle of the date just like you know just in case you need to have an emergency. It's pretty easy to unwind and go choose a different option. So we want to think about like how quitable the decision is. So this would go into like type one versus type. do decisions or two-way door decisions. We hear a lot about that from like Amazon and Jeff Bezos. And that's another way to figure out when you can speed up. So one of the things I say is like

grid is an incredibly important concept because I don't think anybody's ever been really successful at something that they didn't have grit, you know, where they didn't stick to it. But we need to think about the other side, which is you don't want to stick to everything, right? Like you want to make sure that when things aren't for you, when it turns out that you don't prefer them, when they're not going the way that you had hoped and it becomes clear that path is not going to bear fruit that you become very quitting. So you want to be gritty and quitty. You want to be gritty about the things that are really going to get you to something that's going to be great for you. But you want to quit very quickly for things where the world is revealing itself in a way that maybe the chicken isn't so good

or the date you're on isn't so great. Like you don't want to stick with the first person that you ever go out on a date with just because you think stick-toitiveness is important. You want to be able to quit. And there's some other things in my book that I talk about that really help you sort of figure out, Like these are decisions that you can go really fast on. So that's kind of the second point. So point one is how much time do you have? If you have limited time, you're just going to have to decide. Number two is what type of decision are you dealing with?

Because maybe this is one where you can take some shortcuts. And you can go pretty fast because, you know, the penalty for not getting it quite right is just less. It's either doesn't have a lot of impact or you can quit pretty easily and go choose something else now that you have some more information. That's kind of number two. But let's say that that isn't true. And it is something that's really high impact. And it is something that's hard to quit. Now this comes to the third thing of when do you kind of know when to stop.

So basically, the first thing is to realize that you don't want to think about the options that you have in the absolute. In other words, even if it's high impact, you don't want to say to yourself, for me to choose an option, I need to be 90% sure that this is the right thing to do. Instead, you want to think about it relative to the other options that are available to. So it's often the case that there's an option that's a clear winner. over the other options that are available to you. It's clearly the preferred course, but you happen to be 60% on it. And then we don't want to do it. And that's because we're thinking about it

in the absolute sense as opposed to relative to the other choices that are available to us. We'll come back to this episode after this word from our sponsors. Fifth Third Bank's commercial payments are fast and efficient, but they're not just fast and efficient. They're also powered by the latest in payments technology built to evolve with your business. Fifth Third Bank has the big bank muscle to handle payments for businesses of any size. But they also have the FinTech Hustle that got them named one of America's most innovative companies by Fortune magazine. That's what being a fifth third better is all about. It's about not being just one thing, but many things for our customers.

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So the first thing is to not think about options in the absolute because I think that when we think about options in the absolute, that's something that really slows us down. in our decisions. In other words, we feel like in order to pick something, the thing that we pick, we need to be like 90% sure about. And that's a super high standard that you're probably not going to be able to meet. Instead, what we would prefer to do is to think about the options relative to each other because it's very often the case that we'll have a clear winner if we think about it relative to the other options that are available to us. Even if we're not 90% sure that that's going to be the very best choice. It's like, given the options we have, even though I'm only 60% on this option, it's clearly better than all the other options that are available to me. So that's the first thing.

It's like reframe the problem as a relative one. What are my choices, which is the best choice in that set? As opposed to I'm thinking about the choice in an absolute sense compared to being 100% certain about it, which you are always going to be pretty far away from. That's the first thing is to reframe it. And then the second thing is before you decide to say to yourself, is there a piece of information that if I knew it would change my mind? In other words, change how I'm thinking about this option relative to the other options that are available to me or maybe change how I think about this option such that a completely different option would reveal itself to me. Is there information like that? If the answer to that is yes, you have to follow it up with another question,

which is really important, which is, can I get it? And what I mean by that is that sometimes the information that you need would require, as we've said, time travel. Like, you'd have to know how it turned out. If the answer is yes, this is something that's conceivably getable, then you have to ask the last question, which is can I afford it? There's a variety of reasons you might not be able to afford it. The most common reason it would take too much time.

So as an example, like if I'm trying to choose between a job in Massachusetts and Georgia, and I've only ever lived in the South. And I'm thinking that the job in Boston is better than the job in Atlanta. So now I'm in a situation where relative to one another, I've got a winner. There is a piece of information I could find out that would maybe make me not want the job in Boston, which is I can't deal with the winter in Boston, right? Like I've lived in the South my whole life and I hate the weather. Could I conceivably find out whether I like the winter in Boston?

Sure, I could. But I have a time limitation, which, is I can't do that in the time that I need to say yes or no to the job because it would require me to go live in Boston for a winter prior to saying yes to the job. Exactly. You can gather the information of what it might be like to spend a weekend in winter, but you don't have enough time. You can't afford the time to gather the information of how do you feel after spending the entire season. Right. So certainly it's helpful to go spend a weekend in the middle of winter in Boston if that's an option available to you. It's not available to you if they offer you the job in July.

Right. So figure out what you can afford. So time is very often a reason that we can't. Sometimes it's just we aren't resourced to be able to do it or it would cost too much money to find out that information. So if you can't afford it, then that's fine. Like just go ahead and decide. Just make note that you knew that that information would be helpful in advance, but you could not get it for whatever reason. And this you can see will help you with the hindsight bias problem.

Because if you move to Boston and you hate the winter, it's very hard to say, oh, I should have have known when you already went through the process of recognizing that that would be something that was nice to know, but that you could not know. It helps it protects. You know, so we can go through this whole process. And generally, what you're going to find is that when you say to yourself, is there a piece of information that I could find out in the time that I have at a reasonable cost that like doesn't involve time travel, the answer is mostly no. And if the answer is no, then just go ahead and decide. If the answer is yes, then go find the information. Right? So to your point, if it's like, well, I can't go live there for a winter, but they're offering me the job in the middle of February.

I could go there for a weekend. Then go do it. Find the information out. So I'm thinking in terms of, let's say that I was interested in buying a rental property, 1, 2, 3, Main Street in Columbus, Ohio. And the options that I'm comparing it against are option A is I could buy that particular property. Option B is that I could pass on that particular property and continue search. and that search will ultimately yield me something better. Option C is that is similar to option B,

except that search ultimately yields something worse. And option D is do nothing. Right. So it seems like then the next step would be to assess each of those options relative to one another to see which one has the highest likelihood of giving me the desired result based on my objective for this purchase. Right. So let me just make something clear.

I'm assuming in this particular case that you can't, what's called exercise options in parallel. So one of the ways that we can mitigate these kinds of problems about having to make decisions under uncertainty is if we can do more than one thing at once. So we can solve the chicken and the fish problem if we're both eating together and I ask you to, you know, to order the chicken and I'll order the fish. Now we can do both of those at once. So if I'm trying to think about buying a rental property, the first thing I should ask myself is if I buy this rental property, well, I still have capital left over to buy future rental

properties. And if that's the case, I can now create a portfolio of properties, and that helps me, right? It helps me make decisions under uncertainty because I can sort of spread my bets out, right? I mean, that's the whole idea of portfolios. I don't want to have to choose one stock. I'd like to choose many. But I'm assuming we're not in that situation. And even if we are, we would still do the same thing. So basically, this now goes back to this idea of the decision tree. So for each option that you're considering, what you would say is, like, first of all, you want to define what your goal is, which I assume in this case is, to, earn money off of capital that you have. And you now want to forecast some things. So you want to say

if I invest in this property, what do I think the reasonable payoff to investing in this property is? Right. So that's going to look at like how often are you going to win money, how often are you going to lose money? How much money do you think you're going to make? And you can essentially calculate a weighted average or expected value. So you can figure out how much that property is expected to make money for you. Hopefully it's not negative or you wouldn't be considering it. Right. Then. If you're thinking about, well, what if I just don't invest at all? You'd want to think about what that does in terms of your capital or what alternative investments might net you in terms of that.

And then if you're saying, well, maybe I shouldn't invest in this because maybe I think it's too risky or there's not enough that I can earn, it's not going to generate the kind of income that I think is available, then you would say to yourself, assuming that you can't do more than one thing at once, if I wait, how long do I think it's going to be before I can get myself into a property that would meet my requirements that would actually do better than this. And when you do that, you just forecast what's the probability of finding something better than this, you know, within the time frame that I'd like to deploy this capital versus what's the probability that I don't find something better than this. And that basically allows you to do like an

apples to apples comparison between those. So now what you're doing is you're thinking about, again, you're not thinking about that property in an absolute sense. You're thinking it relative to the other option. Is this better than doing nothing? And if I want to deploy the capital in a certain period of time, it doesn't make sense for me to wait. Am I going to get paid for waiting? Because the way that you're going to get paid for waiting is that by being patient, you can get into a property that is going to have a better rate of return. The theme that I hear in several of your answers is that having time boundaries is important to ultimately making a decision. Oh yeah. I mean, it's incredibly important. I mean, you can think in the extreme, right? Like, if you waited for everything, you'd never do

anything. So, you know, time is money. You know, I mean, if you think about just investing, right, money under a mattress doesn't do anything for you. So when you're thinking about whether it makes sense for you to keep the money under the mattress, you have to compare it to what's the probability that if I deploy the capital, I'm going to end up losing money. And what's the probability that if I deploy the capital into certain places that I'm going to end up making money? And the thing is, it's the same with decisions. If you quote unquote don't make a decision, which makes no sense, because not making a decision is deciding that you're fine with the status quo. But that's the same as leaving money under your mattress, right? That's the same as not doing anything. I can not go

on dates because I'm waiting to find the best person to go on a date with ever. But then that means that I'm not meeting people. I'm not gathering information about my preferences. I'm not, you know, there's a whole bunch of things that I'm foregoing. So one of the things that we need to realize is that choosing not to do something has a cost as well. The same as choosing to do something may or may not have a cost. The cost to choosing something is that we forego the other options. And those options may have gains associated with them. For the majority of people, if I choose to marry somebody, foregoing the option to marry anybody else, not at least at the exact same time and not for 100% of the people on the planet. Obviously, some people are fine in two committed relationships at the

same time. But the majority of people, if you marry someone, you're forgoing the opportunity to marry other people. So you're giving up the good stuff and the bad stuff that might be associated with marrying someone different than the person that you actually choose to marry. If you do that, what you might say is, well, then maybe I should never get married. Maybe there's always going to be a better option that's going to come along. But the problem is there's risk associated with that because first of all, there might not be a better option. So number one, you have to think about that in terms of it you're not thinking about what's the ideal person that might come along but what would I expect to be available to me what's the expectation of the person that might come along but then the

other thing is that if you apply that you never get married and assuming your goal is to get married you know particularly if your goal is to get married and have children there are just time limits to that so for most things you want to think about what the time frame is in which you'd be willing to wait in order to actually choose an option and then just operate within that time limit and basically what you should be trying to do within the time that you have is scatter as much information about the options that are available to you so that you have some idea of essentially what the market is, right? Like what's kind of available to you as choices so that you can pick a choice that's

available to you that's going to be better than most of the other choices that you could pick within that time period. Obviously, we can go back to the restaurant example, right? I mean, 14 minutes is an absurd amount of time to spend looking at a menu and you don't really want to do that. But conceivably, you could spend an hour doing that. You could quiz every single person in the restaurant. So, you know, you could look at every single review on Yelp. I mean, you could spend hours trying to choose what to have in a restaurant, but that's absurd because at some point, it's like, look, this is a perfectly fine choice. So what we're trying to do is satisfacers

as opposed to maximizers. Maximizers would be like always striving to make the best possible decision ever, meaning what objectively would be the best possible decision. And that's just going to be impossible when you have limited information. So it's kind of an illusory goal to chase and it's going to make you very indecisive. It's going to make you get trapped in a lot of analysis paralysis and not really be able to think through the situation very clearly. But if you're a satisfacer, what that means is that you're looking for the best option that meets your criteria. And if you can do that, you're going to live a much happier life. Right. Exactly. If you're shopping for mattresses, you're not trying to find the best possible mattress in the world. You just want something that meets your

criteria, and that's good enough. Right, because what if we spend our whole lives shopping for mattresses? It wouldn't be a particularly fulfilling life. Exactly. In the process of making decisions, one thing that you mentioned that we should do as we are making a decision is assess the range of possible outcomes. If I were to take that to its logical extreme, there are quite a number of possible outcomes that could emerge. How do we critically evaluate where to put those boundaries, what's reasonable to include within that range of potential outcomes and what's not? Yeah, so these questions are really deep, right, because we're dealing with uncertainty.

We're making a lot of our decisions, at least partially behind the veil of ignorance, meaning that, you know, a lot of times we sort of can't identify what those outcomes are. You know, the question is, what's the limits of what we want to explore? And it kind of goes back to this idea about time as well, which is we just need to have this operational definition of reasonable. So we can't spend our time making decisions that include an asteroid hitting the Earth. There's two ways to get to what's reasonable. And it's a combination of two things, probability and impact.

We want to be dealing generally in the world of things that have some reasonable probability of occurring. But if they're very low probability, they must be very high impact for us to consider them. So an example is Wimbledon actually had pandemic insurance. Apparently after, I think it was after SARS. it was either after SARS or H1N1, they bought pandemic insurance because it was even though very rare, it was on their radar of something that would be a disaster for them. So it would be incredibly, incredibly high impact if the thing were to occur as rare as it was.

And obviously, there had been a couple of pandemics and, you know, obviously they had talked to some people and they felt that this was something that they really wanted to insure again. So they did actually include this in their range of reasonable outcomes. So reasonable doesn't mean low probability. although that's part of it because generally you would be dealing with things that have some reasonable probability of occurring. But even in the case that it's low probability, we would want to include it if it's high enough impact. The reverse is also true. If it doesn't have any impact, no matter how high probability it is, you don't need to think

about that outcome very much. I don't really include in my decision making that the sun's going to rise because it's incredibly high probability, but it doesn't really have any impact on anything because it's like, that's how the world always is. Like the sun always rises. Okay. So I'm also not thinking about like, well, what am I going to do if the sun rises tomorrow? Let me think about that because that's mundane. It doesn't really matter. So generally when I'm thinking about what the reasonable set of possibilities are, I want to be thinking about those two things, kind of probability and impact as a combination, which, you know, is really what thinking about the possibilities is. The other thing that I can do is sometimes when I'm making a

decision, there's some particular outcome that I really care about that I'm trying to control for with the decision. Then I don't need to worry about like what the whole set is. An example would be if I'm hiring the issue that I've been having at my company is that it's like my recruitment costs are through the roof because that is a lot of turnover. I'm trying to hire someone to reduce turnover. So let's assume that this is a position where there's a lot of people who would be qualified for the position. So what I'm really indexing to, because there's a lot of people who would be qualified, what I'm really indexing to is just what's the likelihood that they're still going to be here in a year or two years or whatever. So now what I can do is I can say,

as I'm considering different people for the job who meet whatever my criteria is, right, that they're qualified for the job. I can now just think about what's the probability that they'll be gone within six months? What's the probability that they'll be gone after six months, but within 18 months? What's the probability that they will stay beyond 18 months? Right. So I could just think about those three things. I could forecast those for the three candidates that meet my qualifications, and then I can just pick the one who has the highest likelihood in my opinion of being with me the longest. That's another way to sort of clear away the clutter is to hone in on what really matters to you if it's the type of decision where you can do that.

Become narrower about your objective. Yeah. And I think that it's a good exercise to do because what it does is it makes you hone in on what matters to you, which obviously has to do with what your goals are and what your values are and honestly what your preferences are. And the thing is that we're actually, those are things that we're actually not so good at. We have this sense that we really know ourselves and we know what our goals are and we know what

our values are. We've all experienced those moments where we thought we wanted something and then when we get it, it turns out we didn't really want it. That just has to do with like some of sort of knowing thyself and knowing what our preferences are or even what our goals are is by striving for those goals and then reaching the goal and realizing that wasn't really a goal that, you know, that I wanted to reach or I don't actually have this preference. I don't like beach vacations. I thought I loved them. But now that I'm on the beach, I'm like, I'd rather, you know, be touring the Parthenon or something, right? So a lot of the way that we sort of figure those things out is

like interaction with the world. But when we actually do try to define the outcomes that we care about, that does help kind of in advance to get us to better think about and better define, like, what are our goals? What are our values? What are the things that we prefer? Well, thank you for spending this time with us. Are there any final messages or final key takeaways that you would like to leave for the audience? Yeah. I mean, I think what I'd really just like to kind of get across us is that the great decision makers are not making decisions that are impossibly better, you know, than the average decision maker. They're a little bit better than the average decision maker.

And the thing about that is that that compounds over time. It really makes a difference. Like, you know, I think about this all the time that I think a lot of our problems is we try to compare ourselves to perfect or what we imagine perfect to be. You know, and if we do that, I think it can become very parallel. It can become really hard to feel good about the things that we do in our life and the decisions that we're making. And if instead we realize, look, our brains aren't perfect and the information that we have isn't perfect. And by the way, there's a lot of luck involved in the way that things actually turn out for us.

So if I can just get myself into a situation where when I make a decision, I've been a little bit more deliberate about it. You know, maybe I have a little more knowledge than I would have if I hadn't been applying a really good process. maybe I'm thinking more deliberately about how the decision might turn out or trying to take a stab at how likely those different things are. Those small changes in how you're thinking about it, even if you just get a little bit of movement, even if you just get a little bit better at it, are going to have a huge impact on your life. But you have to let go of this idea of perfect in order to get there. It's the only reasonable thing to do in a world where we're not omniscient. So perfect is it's just like it's not a reasonable goal. It's one that you can only fail at.

It's only going to make you sad. Right. Good enough is good enough. Good enough is good enough. And if you're making, you know, a little bit better decisions today than you were yesterday because you're thinking about it a little bit more and you're being more reasonable about the way that you process your past experience and the lessons that you're taking from it, your life is going to be so much better for that.

And it's going to be far from perfect. But it's going to be a little bit closer than it was before. We'll come back to this episode in just a minute. But first. And we're back. So what are the key takeaways that we got from this conversation with Annie? Well, here are nine. Number one, learn to overcome hindsight bias.

When we experience the outcome of a decision, we often react as if we should have known what was going to happen. So, for example, if you choose between the chicken or the fish, and you end up disliking your choice, you'll say to yourself, ah, I should have known better. I chose the chicken. I should have known that the fish was going to be the way to go. But the thing is, you couldn't have known. Hindsight bias is at play here.

Of course, it's easy to say, oh, I should have known after experiencing the outcome. Or to say to somebody else, you should have known. But how could you really have known which choice was better at the time at which you made your decision? you made your decision with the information that you had on hand at that time to the best of your ability. We get into this hindsight bias where we feel like that was sort of the only way that it could have turned out. We sort of lose sight of the fact that there's all sorts of different ways that the world could have unfolded. And we think that this is the way that it must have unfolded and therefore it must have been knowable. Being aware of the fact that hindsight bias exists certainly helps.

But Annie suggested going a step beyond that, she suggested writing, down exactly why you made the decision that you made at the time in which you make it and explicitly stating what you don't know. So, for example, if you decide to asset allocate among a bunch of different types of investments, you could write down, all right, here is what I know. I know the research around asset allocation. I know that this is my timeline, intended timeline to retirement as of today. I know that this is the historical. performance of these various asset classes. This is what I know. And then also here's what I don't know. You know, I don't know how each of these classes are going to fare in the years ahead. I don't know

X and Y and Z. Like, write down what you know, write down what you don't. And that way in the future, you can revisit notes about why you made the decision that you did at the time in which you made it. Likewise, if you are reflecting back on a decision that you made in the past and you're beating yourself up about some choice that you made five years ago, you can sit down and write, all right, what did I know at the time that I made the decision? To the best of your ability to recall your thinking at the time, what information did I have on hand? What did I know? And now, with the benefit of hindsight, what didn't I know? What did I not know that I didn't know? Like, what were the unknown unknowns? I didn't buy Zoom stock in 2019 because I didn't know

that there would be a pandemic in 2020. Heck, I didn't even know that a pandemic was the type of thing that I should be worried about. I didn't know it was a viable risk. So writing down what you know and what you don't allows you to get out of the trappings of hindsight bias. It allows you to justify or rationalize or self-blame or self-shame. And that's an actionable step that you can take right away. One last point about hindsight bias. Think of the analogy of, of a tree. There are many branches of possibilities. There are many potential ways that the future can unfold. But once we're past the decision and we're faced with the outcome, we, in terms of hindsight bias, we tend to lop off all of the other branches and focus on the way that this

one specific branch turned out. And that isn't helpful because it could have branched in a number of different ways. So the fact that we happen to be on one given branch doesn't necessarily mean anything about the choices that we made prior to when this branch formed. So that is key takeaway number one, overcome hindsight bias. Key takeaway number two, have compassion for yourself and others. When either we or someone else experiences a bad outcome, it's easy to blame it on the person who made the decision, like, I'm so dumb or they're so stupid. This isn't healthy and it isn't kind.

There is no one-to-one relationship between the outside. outcome and the decision. And when we think this way, when we discount the role that chance and luck and randomness play, we can lose compassion for each other and for ourselves. So instead, reframe it. And when we act that way toward other people, how can we have compassion for them? How can we allow that they may have been doing their best? They may have made a very high quality decision. And on top of that, even if the decision wasn't so good, that's great because now you've learn some new things and you can become a better decision-making going forward. This is another instance in which it might be helpful to keep a decision journal so that you can

analyze your decisions afterward, and you can figure out how to improve your decision-making process the next time, but judge the process, not the decision. And don't judge others or yourself too harshly based on the outcomes of your decisions. Remember that luck sometimes plays a part in those outcomes, and remember that there's a real. range of potential outcomes that could have unfolded. Back to that tree analogy, there are a number of ways that the tree can branch. So that is key takeaway number two. Key takeaway number three, luck chooses the actual outcome that occurs. More often than not, luck intervenes, but we don't tend to attribute outcomes to luck. Once you choose an option, I'm going to have the chicken. That's where

the intervention of luck occurs. So basically, you can think about when I choose an option, what I've done is I've chosen the set of possible outcomes that could happen and the probability that they will happen at. But what I have not done is chosen the actual outcome that will occur. Luck chooses that. I'll emphasize what Annie says. There are a range of possible outcomes that could happen. And there are different probabilities of different outcomes happening within that range.

But we don't know in any one given instance what's going to happen. as Annie said at the beginning of the interview, if you see that there is a 98% chance of sunshine and only a 2% chance of rain, then you're going to choose not to bring your umbrella. But if you do that 100 times, statistically, on two of those occasions, you'll be caught out in the rain without an umbrella. Metaphorically, when that happens in life, it sucks. But that doesn't mean that you necessarily made a bad decision. because luck, chance, randomness, those play a role in it as well.

And so accepting that is key takeaway number three. Key takeaway number four. Accept that you'll never have all the information you want. And I'll let Annie talk about what she means by this. I think that we have to have a lot of acceptance for that. Mostly you're going to be making decisions where you're kind of making your best educated guess, but you're not making a decision to try to get the right answer. that that's not a particularly healthy or helpful way to think about decisions.

So many of us agonize over making decisions because we're trying to get it right. We're trying to create the perfect outcome, but it's out of our control. It's better to let go and make well-thought-out educated guesses than it is to try to control the outcome. We can control our assessment of probability, and we can control the actions that we take as a result of that assessment, but we can't ultimately control the outcome. And additionally, as Annie points out, waiting to make a decision has its own opportunity cost. Waiting to get it perfect might mean missing out on other opportunities or not being able to focus your mental energy on things that matter more.

As she mentioned, it takes people on average 14 minutes to decide what they're going to eat at a restaurant. So think about how long it takes you to make other decisions in your life, particularly decisions that don't matter, decisions that aren't going to impact your happiness one year down the road. What could you do with all of that time if you made quicker decisions about the things that didn't matter and focused your mental energy on the few things that really do? That is key takeaway number four. Key takeaway number five, make faster decisions when the stakes are low. If it's a decision that's pretty low impact and it's not going to have a lot of effect in the long run, you don't want to take a whole lot of time with it. If it is high impact,

that would be a sign that you might want to slow down. So how do we make decisions faster? Well, in order to determine their importance, as Annie describes, use the happiness test. How will that decision impact your happiness over the course of the next week, the next month, the next year, the next 10 years? Chances are for most decisions that we make, it's not going to impact your happiness that much. And if that's the case, you can spend less time on it because there's no reason to get stuck in analysis paralysis at the cost of other things.

And you can also ask yourself, hey, what am I losing out on by not making this decision? What am I losing out on by waffling, delaying, misappropriating my time and energy? We had a guest on our podcast, Mark Manson, who wrote a book called The Subtle Art of Not Giving a Bleep. And the premise of that book is that we give bleeps about way too many things, and most of those things don't matter. So it's better to conserve our bleeps for the few things that actually do. Annie's message about decision making, about deciding what to decide about aligns with that and very much reminds me of that. And so that is key takeaway number five. Make faster choices when the stakes are low. Key takeaway number six, be gritty and quitty.

This is another technique that allows you to make quicker decisions. The easier something is to quit or reverse, the quicker you can be about making a decision. Because why spend a lot of time figuring out what to do if you know that you can make a quick exit. So you want to be gritty and quitty. You want to be gritty about the things that are really going to get you to something that's going to be great for you. But you want to quit very quickly for things that where the world is revealing itself in a way that maybe the chicken isn't so good. Grit is important, but you don't want to stick to everything. If you make a decision that's easy to quit and once you have branched along that chain of the decision tree, you see that, hey, that was the wrong call or that's

not a call that has produced an outcome that you like right now, you can always reverse it. Now, there are some decisions that are irreversible, and you want to be much more careful about that. But if you're making a reversible choice, then make it fast, test it, and iterate as needed. That is key takeaway number six. Key takeaway number seven. Consider your choices relative to one another. When we're considering a set of options, we want to be absolutely sure that the option that we're choosing is the best one ever. That's a really common feeling. We don't want to go for

it unless we're 100% sure. But that's not realistic. So instead of thinking about our options in absolute terms, think about them in relative terms. Think about the options relative to each other. Because it's very often the case that we'll have a clear winner if we think about it relative to the other options that are available to us, even if we're not 90% sure that that's going to be the very best choice. It's like, given the options we have, even though I'm only 60% on this option, it's clearly better than all the other options that are available to me. This also narrows your frame of reference and forces you to consider the options that are in front of you. You might not get as stuck in analysis paralysis if you focus only on the options

that you have available rather than the entire universe of possible options out there. Plus, thinking about unrealistic options isn't a great use of your time. I'm reminded of another book, actually, the book, Seven Habits of Highly Effective People by Stephen Covey. He talks about this concept called Circle of Influence. He says, you know, you've got your circle of concern. There's everything in the world that you could possibly be worried about. But inside of that, there's a much smaller circle, and that's your circle of influence. And those are the things that you can directly influence, you can directly control.

And the more time that you spend inside of your circle of influence, the larger that circle grows, the more time that you're that you spend, acting on whatever is directly within your control, ultimately, the more power you gain, the larger your sphere of influence, your circle of control becomes. I'm reminded of that when thinking about this key concept, this key takeaway, because as Annie points out, there's an entire universe of possible options out there that are so far-fetched, so far-flung, they're probably not going to present in your life. So if you weigh the options that are available to you, make decisions based on that, and create the best possible outcome, by which I mean the most desired outcome based on what you want, the more you do that, the more options ultimately you end up growing. As you capitalize on the choices that are in front of you, the more you do that, the more choices you then end up having, the more that various.

possibilities come closer to you and become more realistic and get closer to your sphere. So, weigh your choices relative to one another and make choices based on what's available, what's in front of you. That is key takeaway number seven. Key takeaway number eight, ask yourself, is there a piece of information that, if I knew it, would change my mind? if you've determined that your decision has serious consequences and is not easy to quit, it's not an easily reversible choice, and you find that you're still completely stuck between the options at hand, then ask yourself this question for clarity. Is there a piece of information that, if I knew it, would change my mind? If the answer is yes, then ask, can I get it? And if you answer yes again, ask, can I afford it? can I afford to get that information? Generally, what you're going to find is that when you say to yourself, is there a piece of information that I could find out in the time that I have

at a reasonable cost that doesn't involve time travel, the answer is mostly no. And if the answer is no, then just go ahead and decide. If the answer is yes, then go find the information. Many of us are reluctant to let go and make the decision when our information is incomplete. But there's a cost to waiting. So how long are you willing to wait in order to choose an option?

This goes back to the idea of, can I afford to get that information? If the cost of getting that information is an unduly long wait, then you might not be able to afford the time that it takes. Is there information that would change your mind? If so, can you get it? And if it is possible to get, is it worth the investment of money to money, time, energy resources to get that information. That series of questions is key takeaway number eight.

Finally, key takeaway number nine, be a satisfacer, not a maximizer. Maximizers are people who want to evaluate every possible option so that they can choose the best one, the optimal one. Satisfisers are people who know what their minimum criteria are, they know what their baseline is, and if they find something that meets that, that's acceptable, then they're satisfied with that.

Research has shown that satisfacers tend to be happier with the outcomes and happier with the choices that they've made than maximizers. So satisfacer simultaneously put less effort into making the decision and are happier in retrospect with the decisions that they make. So what we're trying to do is satisfacers as opposed to maximizers. Maximizers would be like always striving to make the best possible decision ever. meaning what objectively would be the best possible decision. And that's just going to be impossible when you have limited information.

Being a satisfacer means that you stop looking after you found something that's good enough. And that leads to greater long-term happiness because it gives you the ability to build from there. You can devote your time and mental energy to building from there and building on things that really matter. So those are nine key takeaways from this conversation with Annie Duke. Thank you so much for tuning in. If you enjoyed today's episode, there are three things that you can do to help support this show and support everything that we talk about, financial independence, personal finance, decision-making, critical thinking, to support these ideas. First and foremost, share this with a friend or a family member. If you know somebody who you think could benefit from hearing this, send this episode to them.

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You're listening to the Afford Anything podcast, and I will catch you in the next episode.