We tend, as a society, to judge decisions based upon their outcome. It is a concept called “resulting”. Unfortunately, judging past decisions based upon their results can double down on bad habits when long shot decisions pay off.
Combine that with “Survivor bias” and it can create a toxic mix. Survivor bias is when you look only at successful outcomes and draw the conclusion that what successful people did explains their success. For example: I look at gold medal olympians and see that they all practiced intensely. Therefore, if I practice intensely, I will win a gold medal. The theory holds up, until you see that all (or nearly all) olympians practice intensely. Even more to the point… many athletes that never make it to the olympics practice just as intensely as the olympians. Obviously, you must practice intensely to be a successful athlete at any level.
In decision making, it might sound like this: My friend is a millionaire. He won millions by buying lottery tickets. Therefore, I can draw the conclusion that it is wiser for me to invest my money in lottery tickets versus equity investments, so that I can become a millionaire too. In this absurd example, we can easily see the flawed logic.
If outcome is not the wisest way of determining if a decision was a good decision, then, how could we do it better? I would look at two things.
First, the decision should have been based upon broad, solid, objective evidence wisely chosen to avoid confirmation bias. Crucially, we must look at the evidence that was available when the decision was made, and not what we can only gather later to Monday morning quarterback.
Second, a wise decision making process that includes the following attributes:
- Choosing the Right Time-Frame for Decisions
- Overcoming Confirmation Bias
- Overcoming Binary Decision Making
- Overcoming Emotions in Decision Making
- Overcoming Overconfidence in Decision Making
Judge your decisions by what evidence is available and whether a wise decision making process was used. You will be in a position to be much more objective and fair with yourself and others.
Just my opinion. What do you think? Let me know in the comments.
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