PDF Summary:How to Decide, by Annie Duke

Most of us judge our decisions by their outcomes—if things turn out well, we made a good choice; if not, we made a bad one. In How to Decide, Annie Duke explains why this approach is flawed and how luck intervenes between decisions and results. She argues that you can't control outcomes, but you can improve the quality of your decisions through better processes.

Duke introduces tools and frameworks to help you make more accurate decisions by reducing cognitive biases. You'll learn how to separate what you knew when you made a decision from what you learned afterward, how to combine internal and external perspectives for clearer thinking, and how to use techniques like premortems to anticipate potential failures. This guide provides practical methods for evaluating your choices more effectively and learning from your experiences.

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We’ll explore foundational concepts, such as the internal and outside views, and discuss how counterfactual thinking can help you learn from outcomes.

Foundational Concepts: Inside and External Perspectives

One foundational concept is the distinction between the internal and external views. Duke defines the internal perspective as your personal view, rooted in your background and convictions. The outside perspective is how others view your circumstances or what's generally accurate regarding the world, regardless of your viewpoint.

Our personal viewpoint is the origin of many cognitive biases, while external perspectives help correct those biases. The most precise perspective combines the inner and outer views. To gain an outside perspective, seek out applicable statistical baselines for your circumstances. Also, get input and viewpoints from others. Ensure they're at ease disagreeing with you.

The Origins of the Internal and External Perspectives

The internal and external perspectives originated from research on the planning fallacy, which is the tendency to underestimate the time, costs, and risks of future actions while overestimating the benefits. In Thinking, Fast and Slow, Daniel Kahneman explains that the internal perspective is the natural way people make forecasts. People focus on the specific details of their situation and construct a coherent story about how their plan will unfold. The external perspective, on the other hand, involves setting aside the specifics of the current situation and instead looking at statistical information about similar cases. This approach, known as reference-class forecasting, often leads to more accurate predictions.

In addition, Duke emphasizes that combining both the internal and outside views leads to more accurate decision-making. The details unique to your circumstances are important, yet these specifics should be combined with what's generally true in the world.

She recommends completely outlining your circumstances using an external perspective, incorporating relevant averages and input from others. Next, give a completely internal perspective on your circumstances. Find the overlap between the external and internal views to create a more precise narrative.

(Shortform note: The idea of combining the internal and outside views to improve decision-making has its roots in behavioral decision research. In Thinking, Fast and Slow, Daniel Kahneman discusses the “inside/outside view” distinction, which he and Amos Tversky developed in the 1970s. He explains that the inside view focuses on the specific circumstances of the case at hand, while the outside view considers the broader statistical context.)

Learning From Outcomes: How Counterfactuals Help You Succeed

Another key concept is considering alternative scenarios, which provides insight into results. Duke explains that this involves imagining what might have happened if you had chosen differently. It aids your comprehension of why events did or didn't occur, the role chance played, and how to assess the results you achieved against those that could have been. It also helps you release the sense that results are unavoidable and enhance the insights you gain from your experiences.

(Shortform note: In If Only, Neal J. Roese explains that imagining alternative scenarios works because it shifts your attention away from the result and onto the specific steps you remember as changeable. This shift in attention changes how you store the episode in your memory, which in turn changes how you interpret it. This is why considering alternative scenarios can help you learn from your experiences and make better choices in the future.)

Tools & Processes for Robust Decisions

For strong decision-making, Duke suggests using tools that reduce cognitive bias. An effective decision-making tool reduces the influence of cognitive biases like overconfidence, the hindsight effect, and confirmation bias. For example, listing advantages and disadvantages often amplifies bias, so it’s not as effective.

(Shortform note: In Motivational Interviewing, clinical psychologists William R. Miller and Stephen Rollnick argue that listing advantages and disadvantages can help people make constructive changes. They suggest that by carefully exploring the pros and cons of both changing and staying the same, people can clarify their ambivalence and move toward choices that support positive change.)

She also advises considering what you prefer, the returns, and how likely different outcomes are when making decisions. Preferences are the outcomes you desire and the ones you don’t. Payoffs are the benefits or drawbacks tied to each outcome. Probabilities indicate how probable every result is.

Preferences are individual, depending on your objectives and principles. The payoff is the impact of an outcome on advancing or impeding your progress toward a goal. Certain scenarios may offer rewards, letting you acquire things you cherish, forming the decision's positive potential. Other possibilities will result in losing something important to you, forming the downside potential.

The Origins of Preferences, Payoffs, and Probabilities

The focus on preferences, payoffs, and probabilities in decision-making has a rich history in economics and psychology. This approach traces back to the 18th century with Daniel Bernoulli's work on expected utility theory, which aimed to explain how people make rational choices under uncertainty. Bernoulli proposed that people weigh the potential outcomes of their choices based on their personal preferences (utility) and the likelihood of each outcome (probability). This concept was further developed in the 20th century by John von Neumann and Oskar Morgenstern, who formalized expected utility theory in their groundbreaking work, Theory of Games and Economic Behavior.

Next, we’ll discuss decision-making frameworks, including perspective tracking, and explore how calibration and process discipline can improve decision-making precision.

Decision-Making Frameworks

Duke suggests using perspective tracking to improve decision-making. This tool urges you to consider your instincts more critically by making you factor in external perspectives. It requires you to seek how others may perceive the choice and what's generally true about the world around you. Whether you're estimating a decision's odds of success or failure, or contemplating a choice's potential results or rewards, considering the external and internal perspectives separately will help you reach greater precision. Routinely writing down both the inside and outside perspectives can improve the responses you get on your decision-making process.

(Shortform note: Perspective tracking is less useful in situations where you have to make a decision in a split second, such as in an emergency. In these situations, you don’t have time to seek out others’ perspectives or write down your thoughts. In these situations, you have to rely on your instincts and training to make the best decision possible. For example, if you’re a firefighter responding to a burning building, you don’t have time to ask others for their opinions or write down your thoughts. You have to make a decision quickly based on your experience and training.)

As time passes, your outlook will naturally shift, and you'll be able to see your initial views, leading to improved feedback and enhancing accountability in your process. Using perspective tracking, you'll have a clearer understanding of the reasons behind what occurred, which assists in making improved future choices regarding the situation. For negative outcomes, your internal perspective often makes you attribute them to luck instead of your choices. Yet saying your situation is primarily due to luck isn't very helpful in dealing with it. In negative situations, an external perspective often gives a clearer picture of the skills involved and how your choices brought you to your current position.

(Shortform note: While it’s true that blaming luck for your situation isn’t helpful, it’s also possible to go too far in the other direction and blame yourself for things that are outside your control. In Learned Optimism, Martin Seligman writes, “The defining characteristic of pessimists is that they tend to believe that bad events will last a long time, will undermine everything they do, and are their own fault.” He explains that this kind of thinking can lead to depression and a sense of helplessness. So, while it’s important to take responsibility for your choices, it’s also important to recognize that there are factors beyond your control that can influence your outcomes.)

Luck isn't changeable. You're only able to alter your choices. The outside view encourages you to concentrate on aspects within your control. For positive situations, you shift the viewpoint. The internal perspective often makes you attribute success to your choices and minimize luck's impact. Though that can bolster your self-narrative, it might cause you to believe your success is more consistently replicable than it really is. The external perspective highlights how luck plays a part. This is why tracking perspectives is essential for being successful.

(Shortform note: The tension between luck and personal choice is a major theme in economics and philosophy. In Success and Luck, economist Robert H. Frank argues that our lives are far more profoundly shaped by chance events than most of us are willing to acknowledge. He explains that once we recognize the pivotal role of good fortune in our own achievements, it becomes much harder to insist that we morally deserve every advantage we possess. This recognition undercuts the strict meritocratic story and provides a powerful ethical basis for progressive taxation and robust social insurance.)

To adopt an external perspective, consider how you'd see the problem if it were a coworker's, friend's, or family member's. Consider how your perspective might differ from theirs, what suggestions you would give them, and what solutions you would offer. Also, consider if any applicable statistics or information exist regarding typical truths about those in situations like yours.

(Shortform note: This method of imagining the problem as someone else’s has been studied by psychologists. In one experiment, participants were asked to imagine a scenario in which their partner had cheated on them. They were then asked to imagine the same scenario happening to a friend. The participants were able to reason more wisely about the scenario when it was happening to a friend.)

Calibration & Process Discipline

Duke also recommends using pre-failure analyses and backcasting to enhance decision-making accuracy. A premortem is a mental exercise in which you imagine that your decision has failed and you reflect to determine why it happened. A backcast is a mental exercise where you imagine that your decision succeeded, then reflect to determine why it succeeded. These tools enable you to pinpoint potential obstacles and opportunities that you might otherwise overlook. They can assist you in developing contingency plans for different scenarios. To do a premortem, imagine that your decision has failed and ask yourself why it failed.

(Shortform note: To conduct a premortem, the cognitive psychologist Gary Klein recommends that each participant write a brief description of the failure and its causes. Then, the group can pool their notes and discuss them. This approach can help you identify a wider range of potential problems than an unscripted group discussion, as it encourages participants to consider issues they might not have thought of otherwise.)

Then, document the output in a table for exploring decisions. Add a probability estimate for each item. Utilize the results of the backcast and premortem to contemplate actions that could raise the likelihood of success and reduce the risk of failure. Anticipate your responses to potential results to avoid being caught off guard.

(Shortform note: To make your table more useful, add a column for implementation intentions. In Rethinking Positive Thinking, Gabriele Oettingen explains that implementation intentions are “if-then” statements that help you plan for specific situations. For example, “If I see early sign A of this outcome, then I will immediately do action B.” This way, your table becomes a set of pre-committed reactions you can follow automatically when situations arise.)