Situations / Deciding under uncertainty
Deciding under uncertainty
Choosing between options when you can’t know how things will turn out.
Traps you might be in
- No. 0068 Availability HeuristicAfter watching a clip of a shark attack, you cancel a beach swim you were looking forward to.
- No. 0074 Bandwagon EffectYou join the long line at a food truck before looking at its menu.
- No. 0077 Base Rate FallacyYour screening result comes back positive, and you assume you’re almost certain to have the disease.
- No. 0191 Confirmation BiasYou decide a job offer is right, then spend the evening reading only the reviews that make it sound good.
- No. 0196 Conjunction FallacyIn the forecast meeting, a detailed story about a recession and a market crash feels likelier than a recession alone.
- No. 0326 Endowment EffectYou list your old bike for $300, then realize you wouldn’t pay that much for it yourself.
- No. 0335 Escalation of CommitmentThe pilot misses its target, and you open next quarter’s budget to find more money for the plan you pitched.
- No. 0368 False DilemmaYour manager offers two options: approve the weekend deadline, or admit you don’t care about the customers.
- No. 0403 Framing EffectYou feel safer choosing surgery with a 90% survival rate than surgery with a 10% death rate.
- No. 0413 Gambler’s FallacyAfter five heads in a row, you put more money on tails.
- No. 0476 Hot Hand FallacyAfter three winning roulette bets, you double your next stake because tonight you feel unstoppable.
- No. 0483 Illusion of ControlYou choose the lottery numbers yourself, then feel less willing to swap your ticket for one the machine picked.
- No. 0484 Illusion of Explanatory DepthYou tell your child you know how a zipper works, then run out of words after the teeth come together.
- No. 0494 Impact BiasYou check an unanswered job application again, certain that getting the offer would make the whole year feel different.
- No. 0587 Loss AversionYou find $20 in an old coat, then lose $20 on the train and spend the evening thinking about the loss.
- No. 0663 Negativity BiasYou reread the one harsh comment on your presentation while the ten thank-you messages sit unopened.
- No. 0688 Omission BiasYou leave a dangerous machine running, relieved that any accident won’t come from a change you approved.
- No. 0697 Optimism BiasYou read that most applicants get rejected, then start planning what to wear on your first day.
- No. 0703 Outcome BiasYou drive home exhausted, arrive without a scratch, and decide you were fine to drive.
- No. 0705 Overconfidence EffectYou promise the client Friday, leave no buffer, and are surprised when one ordinary snag pushes delivery into next week.
- No. 0732 Peak-End RuleYou call the whole weekend wonderful because of one spectacular dinner and the easy ride home.
- No. 0740 Planning FallacyYou promise the report by Friday, then spend the next week fixing problems your schedule never included.
- No. 0763 Present BiasYour workout starts in ten minutes, but you sit down for one more episode.
- No. 0775 Probability NeglectYou cancel a flight after picturing a crash, without checking how likely a crash is.
- No. 0846 Representativeness HeuristicA stranger talks enthusiastically about chess, and you decide he’s a mathematician before learning what he does for a living.
- No. 0887 Scope InsensitivityThe fundraiser changes from saving 200 birds to saving 20,000, and you still reach for the same $20.
- No. 0944 Slippery Slope FallacyYour committee rejects one late application because, by next year, nobody will respect the deadline.
- No. 0979 Status Quo BiasYou renew the same phone plan again, with a cheaper offer still open in the next tab.
- No. 1003 Sunk Cost FallacyYou keep pouring time into something because of everything you’ve already put in.
Tools to try
- No. 0001 A/B TestingYour team prefers the new signup page, but you keep the old one live for half the visitors to see what happens.
- No. 0080 BATNAThe dealer holds firm on price, and you have another car lined up across town.
- No. 0087 Bayesian UpdatingThe fraud alert looks damning, until you learn how often it flags perfectly ordinary purchases.
- No. 0125 CalibrationYou open your prediction log and find that only half the things you called 80% certain actually happened.
- No. 0147 Circle of CompetenceYou understand the rental property’s repairs, but the agent’s spreadsheet leaves you guessing about the investment.
- No. 0199 Consider-the-Opposite StrategyBefore sending a furious reply, you jot down three reasons your coworker’s message might not be an insult.
- No. 0239 Decision JournalSix months after a disappointing hire, you open your original notes and discover how certain you were that it would work.
- No. 0351 Explore-Exploit Trade-OffYou order your usual lunch while a new place across the street posts a menu you haven’t tried.
- No. 0381 Fermi EstimationThe launch meeting starts in ten minutes, and you still need a defensible guess at how many support agents to book.
- No. 0386 First Principles ThinkingYour team debates which competitor’s checkout to copy, and you ask what a customer actually needs to finish buying.
- No. 0532 InversionBefore moving day, you list everything that could leave you outside the new apartment with a packed truck and no keys.
- No. 0590 Margin of SafetyYour flight lands at noon; you book the three o’clock train and leave the one o’clock ticket alone.
- No. 0618 Minimum Viable ProductBefore building a meal-planning app, you sell five people a week of menus and make the plans by hand.
- No. 0686 Occam’s RazorThree apps stop working at once, and you start reinstalling each one before checking the shared connection.
- No. 0696 Optimal StoppingYou find a rental you can afford, but keep refreshing the listings while its application deadline gets closer.
- No. 0704 Outside View vs. Inside ViewYou budget six weeks for a renovation, then learn that the last five similar jobs on your street took four months.
- No. 0754 Pre-MortemImagine the plan has already failed, then explain why. You’ll find problems you couldn’t see while hoping it would work.
- No. 0872 Safe-to-Fail ExperimentYou test the new scheduling rule on one volunteer team, with someone ready to restore the old schedule that afternoon.
- No. 0878 SatisficingYou find an apartment within your budget and near work, then close the other rental tabs.
- No. 0886 Scenario PlanningBefore you sign a three-year lease, you sketch what happens if your biggest customer leaves or demand doubles.
- No. 0892 Second-Order ThinkingYou waive a late fee to help one customer, then next month five more customers start paying late.
- No. 1057 Two-Way vs. One-Way DoorsYour team spends three meetings debating a button label it could change back before lunch.
Patterns at play
- No. 0245 Default EffectYou silence your new phone after a week of alerts from settings you never chose.
- No. 0459 Hedonic AdaptationA month after buying the car you couldn’t stop thinking about, you drive it without noticing it.
- No. 0512 Information CascadeYou approve the supplier despite a bad test result, assuming the three people who approved it before you know something you don’t.
- No. 0574 Lindy EffectYou reach past this year’s bestseller for the book people are still recommending fifty years after it appeared.
- No. 0956 Social ProofYou walk past an empty restaurant and join the line outside the one next door.
- No. 1090 Wisdom of CrowdsYour team’s guesses for next month’s sales range widely, but their average lands closer than anyone expected.
Concepts to know
- No. 0084 Bayes’ TheoremYour screening result comes back positive, and you start making plans as if the diagnosis is settled.
- No. 0112 Bounded RationalityYou have twenty apartment listings open, a lease to sign by Friday, and no time to inspect them all.
- No. 0193 ConfoundingYou buy the supplement used by the healthiest people at your gym, without asking what else they do.
- No. 0292 Dual-Process TheoryYou reread an email you nearly sent and realize your first reply would have made the argument worse.
- No. 0307 Effect SizeThe tutoring program boasts a statistically significant gain; you look closer and find an average improvement of one test point.
- No. 0343 Expected ValueThe repair shop offers a $180 protection plan, and you weigh that price against repairs you might never need.
- No. 0355 ExternalityYour neighbor finishes a cheap backyard bonfire, while you bring the laundry inside and close every window.
- No. 0376 Fat-Tailed DistributionsYour insurance budget survives hundreds of ordinary claims, then one warehouse fire costs more than all of them put together.
- No. 0589 Map vs. TerritoryYour phone says the path continues, but you’re standing in front of a locked gate.
- No. 0659 Necessary vs. Sufficient ConditionsYour application meets every published minimum, but the rejection email still arrives.
- No. 0694 Opportunity CostYou accept a Saturday overtime shift, then realize it costs you the only afternoon you could spend with your visiting sister.
- No. 0698 Option ValueYou pay a little extra for a refundable ticket because you still don’t know whether you can go.
- No. 0864 Risk vs. UncertaintyYour spreadsheet gives a new store a 12% chance of failure, though nobody can explain where the 12% came from.