☝🏻 Decision Making
Some principles and laws to keep in mind when making decisions:
When a measure becomes a target, it ceases to be a good measure.
Goodhart's law
The more any quantitative social indicator is used for social decision-making, the more subject it will be to corruption pressures and the more apt it will be to distort and corrupt the social processes it is intended to monitor.
Campbell's law
Incentives can backfire: rewards for a behavior may encourage worse outcomes.
Cobra effect
Attempts to suppress information often amplify attention to it.
People with low competence tend to overestimate their ability.
Employees are promoted until reaching a role where they’re less competent.
Peter principle
Teams spend disproportionate time on trivial matters over important ones.
With a favorite tool at hand, every problem looks like a nail.
After some point, each extra input yields smaller gains.
Actions often produce outcomes that were not intended.
Prefer simpler explanations that adequately fit the facts.
Occam's razor
Models that fit training data too closely perform poorly on new data.
Overfitting
Bad Decision vs Bad Luck
At each choice point along the chain, ask four questions:
- Was the relevant information available when I decided?
- Did I consider this risk and accept it knowingly? If so, that’s a priced-in risk, not a mistake.
- Would gathering more information have been cheap at the time?
- With the same information, would I make the same choice again?
- yes, no, yes, no -> it was a bad decision.
- no, yes, no, yes -> it was bad luck.
The tiebreaker: track it over time. A single event can’t separate luck from a decision. If “bad luck” keeps landing in the same place, it isn’t luck.
Bottom Line
Improvise, Adapt, Overcome