Would You Know a Good Decision if You Saw One?

Separating decisions from outcomes is a necessary step to determine good decisions from bad ones.

Uncertainty is the main underlying reason why we can have good decisions and bad outcomes (or vice versa). Like it or not, acknowledge it or not, uncertainty is an important element of most decisions. Probability is the language of uncertainty. It enables us to assess, and reason logically about, our level of knowledge. It therefore plays an important role in decision analysis. Unfortunately, even the brightest people are bad at reasoning under uncertainty and are seduced into using “rules of thumb” that cause us to fall prey to a number of errors.

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