What will sharpen your thinking today:

• Makes-You-Think Tweet: Good character stems from moderation

• Mind-Expanding Concept: Resulting, key concept in decision-making

• Cool Quote or Question: The right amount of hardship in life

• High-Signal Content: On signaling and countersignaling

Makes-You-Think Tweet

Mind-Expanding Concept

Resulting

How do you know if you made the "right" or "wrong" decision about something? If you’re like most of us, you look at the result. After all, the point of making a decision is to get a result. You bought a stock. It increased in price. Hence, you made a good decision. Right?

That right there is resulting - the tendency to judge the quality of a decision by its outcome. It's something we instinctively do. The problem is that this line of thinking ignores the role of luck in outcomes.

The impact of luck varies by domain. It's much larger in roulette than in basketball. And much smaller in chess than in poker. Our lives look less like chess and more like poker, where decisions involve hidden information, uncertainty, and risk.

We make thousands of decisions every day. Being a better decision-maker means improving our process of making decisions. In the long run, the one with the best process will be better off. It’s the difference between a successful professional poker player and an amateur.

Two core things to improve the process:

1. Embrace uncertainty: the world is pretty random. Life is pretty messy. And some things are unknown or unknowable. A good process seeks to represent reality as it is, not as we wish. We don't know much about most things, so get used to saying "I don't know".

2. Practice probabilistic thinking: decisions are bets on the future. The future has infinite possibilities. Some are more probable than others. It's not about being right or wrong but about identifying the most likely scenarios and stacking the odds in your favor.

If you want to learn more, check out Annie Duke’s “Thinking in Bets”

Cool Quote or Question

The reflex is to want a life as smooth as possible for them. Why would you want your cute little child to ever suffer?

But think for a second you realize that the most meaningful and rewarding experiences of your life were not the sipping-caipirinhas-on-the-beach type of experiences. They were hard.

No stress, no growth. Meaning stems from doing hard things, including having children. No parent would say it’s a walk in the park but almost everyone would say it’s among the most if not the most rewarding thing they’ve ever done.

So hardship seems to be a matter of dose. But what’s the right one? What are the right kinds of hardship? And what’s the right time to allow our kids to start facing reality without a mouthguard?

High-Signal Content

“…if you’re a top executive, turning up to work on a bicycle is a high-status activity because it was a choice and not a necessity. But if you work at Pizza Hut, turning up on a bike means you can’t afford a car.”

“One form of countersignaling is excess humility. It increases status for those who are already high status, but humility decreases status for those who are not high-status”

See you next week,

Filipe