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Decision-Making Under Uncertainty

Decision Quality vs. Outcome Separation

Level: advancedModel #28
decision-making
Description

Results are determined by decision quality plus luck. Conflating the two—working backward from outcomes to judge decisions—creates a vicious cycle where you learn the wrong lessons. The solution is evaluating decisions by process and information available at decision time, not by results that include randomness.

Applications
Before making decisions, write down your reasoning, the information you're relying on, and your probability estimates. This creates a record you can later review without hindsight bias contaminating the analysis.
After outcomes occur, ask: "Given what I knew then, would I make the same decision?" not "Was I right?" Focus on whether your process was sound, not whether luck broke your way.
Build decision-making frameworks you can evaluate. Track decisions systematically across months or years, looking for patterns in your process, not just tallying wins and losses.
Separate luck from skill by understanding base rates and sample sizes. If success requires you to be both good and lucky, the first few successes tell you little about your skill level.
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