“Superthinking” by Gabriel Weinberg
“tragedy of the commons. However, unbeknownst to him, his hypothetical situation had really occurred in Boston Common two hundred years earlier (and many other times before and since). More affluent families did in fact keep buying more cows, leading to overgrazing, until, in 1646, a limit of seventy cows was imposed on Boston Common.”
“Agency can lead to other issues as well, collectively known as the principal-agent problem, where the self-interest of the agent may lead to suboptimal results for the principal across a wide variety of circumstances. Politicians don’t always act in the best interest of their constituents; real estate agents don’t always act in the best interest of their sellers; financial brokers don’t always act in the best interest of their clients; corporate management doesn’t always act in the best interest of its shareholders—you get the idea. The agent’s self-interest can trump the principal’s interests.”
“Moral hazard and principal-agent problems can occur because of asymmetric information, where one side of a transaction has different information than the other side; that is, the available information is not symmetrically distributed. Real estate agents have more information about the real estate market than sellers, so it is hard to question their recommendations.”
“cobra effect, describing when an attempted solution actually makes the problem worse.”
“When the British were governing India, they were concerned about the number of these deadly snakes, and so they started offering a monetary reward for every snake brought to them. Initially the policy worked well, and the cobra population decreased. But soon, local entrepreneurs started breeding cobras just to collect the bounties. After the government found out and ended the policy, all the cobras that were being used for breeding were released, increasing the cobra population even further.”
“The Streisand effect applies to an even more specific situation: when you unintentionally draw more attention to something when you try to hide it. It’s named for entertainer Barbra Streisand, who sued a photographer and website in 2003 for displaying an aerial photo of her mansion, which she wanted to remain private. Before the suit, the image had been downloaded a total of six times from the site; after people saw news stories about the lawsuit, the site was visited hundreds of thousands of times,”
“In the legal context where the term chilling effect originated, it refers to when people feel discouraged, or chilled, from freely exercising their rights, for fear of lawsuits or prosecution. More generally, chilling effects are a type of observer effect where the threat of retaliation creates a change in behavior.”
“In other words, seemingly small changes in incentive structures can really matter. You should align the outcome you desire as closely as possible with the incentives you provide. You should expect people generally to act in their own perceived self-interest, and so you want to be sure this perceived self-interest directly supports your goals.”
“boiling frog: Suppose a frog jumps into a pot of cold water. Slowly the heat is turned up and up and up, eventually boiling the frog to death.”
“From finance, short-termism describes these types of situations, when you focus on short-term results, such as quarterly earnings, over long-term results, such as five-year profits.”
“To escape the fate of the old lady or the boiling frog, you need to think about the long-term consequences of short-term decisions. For any decision, ask yourself: What kind of debt am I incurring by doing this? What future paths am I taking away by my actions today?”
“Another model from economics offers some reprieve from the limitations of path dependence: preserving optionality. The idea is to make choices that preserve future options. Maybe as a business you put some excess profits into a rainy-day fund, or as an employee you dedicate some time to learning new skills that might give you options for future employment. Or, when faced with a decision, maybe you can delay deciding at all (see thinking gray in Chapter 1) and, instead, continue to wait for more information, keeping your options open until you are more certain of a better path to embark upon.”
“One model that can help you figure out how to strike this balance in certain situations is the precautionary principle: when an action could possibly create harm of an unknown magnitude, you should proceed with extreme caution before enacting the policy. It’s like the medical principle of “First, do no harm.”
“too much information leads to information overload, which complicates a decision-making process. The excess information can overload the processing capacity of the system, be it a single person, group, or even computer, causing decision making to take too long. There is a name for this unintended consequence: analysis paralysis, where your decision making suffers from paralysis because you are over-analyzing the large amount of information available.”
“The model perfect is the enemy of good drives home this point—if you wait for the perfect decision, or perfect anything, really, you may be waiting a long time indeed. And by not making a choice, you are actually making a choice: you are choosing the status quo, which could be considerably worse than one of the other choices you could already have made.”
“There is a natural conflict between the desire to make decisions quickly and the feeling that you need to accumulate more information to be sure you are making the right choice. You can deal with this conflict by categorizing decisions as either reversible decisions or irreversible decisions. Irreversible decisions are hard if not impossible to unwind. And they tend to be really important. Think of selling your business or having a kid. This model holds that these decisions require a different decision-making process than their reversible counterparts, which should be treated much more fluidly.”
Some decisions are consequential and irreversible or nearly irreversible—one-way doors—and these decisions must be made methodically, carefully, slowly, with great deliberation and consultation. If you walk through and don’t like what you see on the other side, you can’t get back to where you were before. . . . But most decisions aren’t like that—they are changeable, reversible—they’re two-way doors. If you’ve made a suboptimal [reversible] decision, you don’t have to live with the consequences for that long. You can reopen the door and go back through. . . .
In your own life, you can use Hick’s law to remember that decision time is going to increase with the number of choices, and so if you want people to make quick decisions, reduce the number of choices. One way to do this is to give yourself or others a multi-step decision with fewer choices at each step, such as asking what type of restaurant to go to (Italian, Mexican, etc.), and then offering another set of choices within the chosen category.
In addition to increased decision-making time, there is evidence that a wealth of options can create anxiety in certain contexts. This anxiety is known as the paradox of choice,
There is also a model that explains the downside of making many decisions in a limited period: decision fatigue. As you make more and more decisions, you get fatigued, leading to a worsening of decision quality. After taking a mental break, you effectively reset and start making higher-quality decisions again.
Most generally, consider heeding Murphy’s law: Anything that can go wrong, will go wrong.