Hindsight Is NOT 20/20
In the short-term, for any single decision, there is only a loose relationship between the quality of the decision and the quality of the outcome.
Annie Duke, How to Decide: Simple Tools for Making Better Choices
You’re on national TV, and you have a chance to win one million dollars.
When you started playing this game, there were twenty boxes with values ranging from $1 to $1,000,000.
You now have just five boxes left.
The host offers you $100,000 to quit.
What should you do?
Should you press your luck or accept the offer?
You decide to continue, and eventually you become a millionaire.
Did you make a good decision?
Your decision had a good outcome, but that doesn’t mean your decision was wise.
The quality of your decision can be determined only by what you knew and what you could have known before you opened any more boxes.
You knew that the five boxes contained $1, $20, $100, $2,000, and $1 million.
Fortunately, you took a class in statistical analysis and know that the average value of each box is $200,424.20.
Should you accept the offer?
If you did, you would only get less than half the value of the remaining boxes.
However, you can only play the game once.
There is a 60% chance that you will win $100 or less, a 20% chance that you will get $2,000, and the same 20% chance that you would choose the box with the million dollars.
How would you feel if you ended up with one dollar when you could have taken the guaranteed $100,000?
Suppose you had $85,000 in combined credit card and student loan debt and that you are struggling to pay your bills each month.
(Assume that you live in a fantasy world where there are no taxes. You are already accepting the fantasy that you are winning one million dollars.)
Should you accept the offer?
We already know that you won the million. But does that make it a good choice to turn down the offer of $100,000?
You say, “But the million dollars is life changing.”
In this situation, the $100,000 would also be life changing, so maybe that would have been the best choice.
Most of our choices cannot be assigned such accurate numbers.
Even then, we can improve our choices by asking ourselves good questions and by finding out as much as we can.
And when we judge the quality of the decision, we shouldn’t base that on the outcome.
Bad decisions sometimes give us good results.
And a single good decision might not turn out well.
But over time, good decisions will produce significantly better results.
Now available at Amazon: The Courageous Heart: Wisdom for Difficult Times in paperback and eBook.
