How to make decisions like a poker player

> Put more extremely, if I offer you a 99% chance to take make one billion dollars (legally) and a 1% chance of being killed, would you take it? I definitely wouldn't.

I would even if it offered 50+% of getting killed. The small chance you strike a billion is worth the risk.

The non buzzwordy way to express this is to use some basic concepts in probability to make accurate decisions in the face of randomness. Specifically when making a decision you should think about the expectation[1] of the outcomes overall and some properties of the distribution. This requires you to think through what all the outcomes are and what you think their probabilities are.

1)All other things being equal you should generally prefer a higher expectation decision to a lower-expectation one

2)But you have to avoid decisions which have outcome distribution properties you can't tolerate. Most obviously you should generally ensure that your risk of ruin is zero because even if the probability is very low, that outcome is close to impossible to recover from so must be avoided.

3)For two possible strategies with similar-ish expectations in real-life terms you may well want to choose the one with the lower standard deviation of payoffs. Like say you're choosing between an offer at medical school to train to be a dentist and pursuing your long-shot idea of going to Hollywood and trying to make it as an actor. Imagine that when you look at the outcomes you estimate that in acting you have an insanely low probability of making it but a huge payoff if you do and in dentistry most people do pretty well but no-one's partying on superyachts with Jay-Z and Beyonce. Well even if the expectation of acting works out slightly higher, if they are close enough you should probably pick dentistry because the variance of outcomes is just way lower. If you think about your future as a monte carlo simulation you want to end up "ok" on most of the paths in the simulation even if that means giving up on some "lights out" outcomes.

4)most people agonise the most about decisions where the expectation is really pretty similar so it just doesn't matter that much either way. So don't beat yourself up about whether you made the right decision - just try to learn from the decision and move forward

A huge mistake people make is to evaluate the quality of the decision based on the single possible outcome that crystalised into reality by actually happening rather than using the framework above. So resist that temptation and instead evaluate your decision based on whether you chose to maximise expectation while avoiding risk of ruin and excessive variance.

[1]In the sense of being the weighted average of all possible payoffs where the weights are the probabilities and the payoffs are the utility of each outcome (usually just in cash terms).

Not OP.

I've seen many people getting a 3 year contract without having a clue of what they had to do, just buzz words.

Public sector

I don't think the advice doesn't apply (they still claim Jane made a good decision, even though it led to a bad outcome: their point is that Jane should keep making good decisions, and not worry about bad outcomes because you can't control luck — if you mostly make good decisions, luck won't matter in the long run), it's just that it's pretty much useless because

> "Probability of getting it — you cannot know the exact probability, but estimate it the best way you can (remember the bet with a friend)"

is the hard part. Jane's case was clear (good decision), but what about Mike? Is there a proportion of his savings he should have invested that would have turned his "bad decision" into a "good one"? We have no signal to tell us what the probability of any cryptocurrency going up or down is over, say, 6 months (they've all gone up and down completely arbitrarily). Basically, finding the probability of any particular "success" (or actually, a failure) will easily tell you how much you should risk.

And that's what it's like with the most of life decisions as well: we don't know the probability — not even the ballpark range. Likelihood that any one person you meet is going to be your life-long partner is basically nil: but we still invest in building relationships before fully committing to either decide they are not, or increase the probability that they will be. But we still do that relationship building investment based on very few signals (appearance, short chats and potentially what social circle someone is from if from a shared acquaintance).

Wow this is 1000x than what’s in the article - thanks.