How to Decide: Simple Tools for Making Better Choices

A base rate gives you a place to start when you are trying to estimate the likelihood of any outcome (or the upside and downside potential).

Decisions where the cost to quit is manageable also give you an opportunity to gather information through innovation and experimentation. Amazon founder Jeff Bezos and Virgin Group founder Richard Branson include the concept of a “two-way-door” decision in their decision process. A two-way-door decision is, simply put, a decision where the cost to

That’s how Dr. Evil makes you fail. He gets you to make small, poor choices that hide in the shadows, keeping you from seeing how repeatedly making those decisions guarantees failure. You see each instance as unique and justifiable and don’t see how they fit into a larger scheme.

If a possible outcome unfolds, will your happiness increase or decrease? Will you gain or lose time? Will your social currency rise or fall? Will you gain or lose self-esteem? Will you make someone important to you happier or less happy? Anything we value can be the currency of a payoff, positive or negative.

When you’re making a decision, your objective is to choose the option that gains you the most ground in achieving your goals, taking into account how much you’re willing to risk.

SIX STEPS TO BETTER DECISION-MAKING Step 1—Identify the reasonable set of possible outcomes. Step 2—Identify your preference using the payoff for each outcome—to what degree do you like or dislike each outcome, given your values? Step 3—Estimate the likelihood of each outcome unfolding. Step 4—Assess the relative likelihood of outcomes you like and

The premortem reduces the natural tendency toward overconfidence, the illusion of control, and other cognitive biases that cause you to overestimate the chances that things will work out. The backcast evens out the view if you are pessimistic in nature or underconfident.

being “quitty” allows you to make better choices about when to be gritty.

SIX STEPS TO BETTER DECISION-MAKING Step 1—Identify the reasonable set of possible outcomes. Step 2—Identify your preference using the payoff for each outcome—to what degree do you like or dislike each outcome, given your values? Step 3—Estimate the likelihood of each outcome unfolding. Step 4—Assess the relative likelihood of outcomes you like and