Decision-Making under Uncertainty

Just because you have a good outcome does not make you a good decision-maker, and just because you have a bad outcome does not make you a bad one. 

When making decisions under uncertainty, you can not judge the quality of the decision based on the outcome after the fact. First, if you're looking at it after the fact, you will probably attribute the wrong cause since you view it in hindsight (we crave causality and explanations). There is so much randomness in the world, and you can not possibly gather enough relevant information to make perfect decisions every time. You are a good decision-maker because of the decision-making process you follow. People with bad or no processes get lucky, and those with good processes get unlucky. You focus on the process of generating the decisions because that is the only thing you can truly control, and some strategies give you the best chance of making good decisions; the first is making sure that you stay far away from blowing up or death, more specifically, losing money when you think that there is no way you could lose money or something going wrong when you think there is no way something bad could happen, the hits that blindside you hurt the worst. You need to work within a margin of safety to ensure you understand and know how big the buffer is between what you expect to happen and what could happen. You can only assess this margin of safety by knowing and being clear on exactly what problem you are solving and understanding the risks that come with it. You know the problem you are solving by gathering good information sourced as close as possible to the problem. As information gets passed down the line further and further from the problem, it goes through filters, and these filters distort the information usually to the point where, in the best case, it is useless, and in the worst, it is harmful and will lead you astray. Beware of abstractions. Worse, the information gets filtered through people's biases and emotions. Beware of confirmation bias, and stop gathering information and act when you know you have good information, missed your first opportunity, or stopped gathering good information.

An often overlooked aspect of dealing with uncertainty is having the stamina and mental fortitude to persevere. There is an adage that goes, “Are you willing to run when the distance is unknown?”. Dealing with losses and setbacks repeatedly is hard on our emotional apparatus. We prefer our losses to be quick and sudden and our gains to be drawn out over a longer period. If your gains are quick and sudden and the losses are drawn out over a long period, that is hard to deal with. However, that is how most things work. The beginning of the exponential curve is flat, and your hard work often goes unnoticed by yourself and others. It's important to remember that our emotional apparatus is not made to deal with uncertain and abstract things; you just have to buckle down and trust the process. That is if you’re working on the right thing, and you might not be working on the right thing. In which case, you should change course and find the right thing. There is a saying in golf that some players are talented, and some find it in the dirt. It's about the iterations, not necessarily the repetitions. But that's a topic for another essay.