When should you make decisions slowly and when should you make decisions quickly?

From Annie Duke’s “How to Decide“

When should you make decisions quickly? When should you make decisions slowly?

• “The smaller the penalty, the faster you can go. The bigger the penalty, the more time you should take on a decision.”
  
  
• “The smaller the impact of a poor outcome, the faster you can go. The bigger the impact, the more time you should take.” (p. 150)

How will I know if a decision will have high impact or low impact?

Try the Happiness Test:

• “You can identify low-impact decisions with the Happiness Test, asking yourself if how your decision turns out will likely have an effect on your happiness in a week, a month, or a year. If the type of thing you are deciding about passes the Happiness Test, you can go fast. If a decision passes the Happiness Test and the options repeat, you can go even faster.” (p. 177)
  
  
• “If you’re like most people, you answered that the food you ate at that one meal didn’t affect your happiness much, if at all, a year later. If you’re like most people, that’s also true if I asked you after a month, or even a week. Regardless of whether your food is good or bad, it is unlikely to have any significant effect on your happiness in the long run. The same is also true if you watch the beginning of a bad movie on Netflix or wear pants that turn out to be uncomfortable. What this tells you is that choosing what to eat, watch, or wear are types of decisions that are low impact.” (p. 153)
  
  
• Examples:
  
  Choosing what to eat will have low impact in your happiness in a year and is a repeating option.
  
  Choosing which movie to see will have a low impact in your happiness in a year and is a repeating option.
  
  Choosing a driving route is a repeating option.
  
  
• “Decisions that repeat also provide opportunities for choosing things you are less certain about, like a food you’ve never tried or a new TV show, because you don’t get penalized as heavily for taking those gambles. At little cost, you get information in return about your likes and dislikes, and you might find some surprises in there.” (p. 154)

What are the problems with making decisions too slowly?

• “The cost of deciding too slow is that you can’t use that extra time to do other things, including making other decisions that might have a lot of potential upside.” (p. 149
  
  
• “The time the average person spends deciding what to eat, watch, and wear adds up to 250 to 275 hours per year. That’s a lot of time spent on decisions that intuitively feel like they are inconsequential. It may seem that spending an extra minute of your time here and there on these routine decisions isn’t that big a deal, but that’s because it’s a death by a thousand cuts. These tiny expenditures mount up over time until you have spent seven workweeks a year deciding what to eat, watch, and wear. Time is a limited resource that you need to spend wisely. The time you take to decide is time that you could be spending doing other things, like actually talking to the person sitting with you in the restaurant. The ability to figure out when you can decide faster (and when you need to slow down) is a crucial decision skill to develop.” (p. 149)

What are the problems with making decisions too quickly?

• “But going too fast also has a cost. The faster you decide, the more you sacrifice accuracy.” (p. 150)
  
  
• ” The more you know your own preferences, the better your decision-making will be. One of the best ways to figure out your likes and dislikes is to try stuff. The faster you make decisions, the more stuff you can try. That means more opportunities to experiment and poke at the world. That means more opportunities for you to learn new stuff, including new stuff about yourself. So let’s get to figuring out how to speed up.” (p. 150)

Try a freeroll

• “A situation where there is an asymmetry between the upside and downside because the potential losses are insignificant.” (p. 156)
  
  “The key feature of a freeroll is limited downside, meaning there isn’t much to lose (but there might be a lot to gain).” (p. 156)
  
  
• Ask yourself:
  
  1. “What’s the worst that can happen?”
  2. “If the outcome doesn’t go my way, am I worse off than I was before I made the decision?”

Examples of a freeroll:

• The odds of you getting into you dream college is low. You should still apply if it doesn’t cost too much too to apply. If you don’t get in, you’re not worse off, if you get in, you get to go to your dream school.
  
  
• Your dream house is 20% over you budget. You should still put an offer if it doesn’t cost too much to put an offer. If you don’t get it, you’re not worse off. If you do get it, your get your dream house for a steal.
  
  
• “Have you ever been in a situation where you have a friend who is agonizing over whether to ask someone out on a date and say, “Just ask them out. This could be the love of your life. The worst that can happen is they’ll say no!” (p. 156)
  
  
• “In addition to impact obscuring the freeroll, the fear of failure or rejection can also be paralyzing, especially when there is a high probability that things won’t go your way. Receiving the rejection letter from your dream school hurts in the moment. No one wants to hear a realtor say, “The buyer thought your offer was a joke.” When you pass on such opportunities or let those small, temporary negatives slow you down, you’re magnifying the moment of rejection and ignoring the asymmetry working in your favor.” (p. 158)

If you are trying to decide between two options and it’s really hard, you should decide fast.

• “The very thing that slows you down—having multiple options that are very close in quality—is actually a signal that you can go fast, because this tells you that whichever option you choose, you can’t possibly be that wrong, since both options have similar upside and downside potential.” (p. 162)”
  
  
• “If you look at the decision through the frame of the relative quality of the options as compared to each other, your vantage point changes. Instead of taking tons of time trying to tease out the small differences between the choices, reframe the decision by asking yourself, “Whichever option I choose, how wrong can I be?” (p. 163)
  
  
• Let’s say you are having a hard time deciding between Paris and Rome for vacation. “What if, instead of choosing between Paris and Rome, you were choosing between a vacation in Paris and a vacation at a trout cannery? Would you have trouble or experience any anxiety making that choice? I’m assuming the answer is no. That tells you that the closeness of the options is what’s slowing you down. You’d have no trouble choosing between options as far apart in their potential payoffs as a week in Paris versus a week spent among discarded fish parts. And that’s a clue as to why you can and should speed up these types of decisions.” (p. 162)
  
  
• “WHEN A DECISION IS HARD, THAT MEANS IT’S EASY – When you’re weighing two options that are close, then the decision is actually easy, because whichever one you choose you can’t be that wrong since the difference between the two is so small.” (p. 163)

Try the only options test.

• “For any options you’re considering, ask yourself, “if this were the only option I had, would I be happy with it?” (p. 164)
  
  Examples:
  
  If this were the only thing I could order on the menu..
  If this were the only show I could watch on Netflix tonight…
  If this were the only place I could go for vacation..
  If this were the only house I could buy…
  If this were the only job I got offered…
  
  
• “If you’d be happy if Paris were your only option, and you’d be happy if Rome were your only option, that reveals that if you just flip a coin, you’ll be happy whichever way the coin lands.” (p. 165)
  
  
• “The Only-Option Test clears away the debris cluttering your decision.”(p. 165)

Try the menu strategy:

• “Spend your time on the initial sorting. Save your time on the picking.” (p. 166)
  
  
• “This strategy for choosing what to order from a menu can be broadly applied to decision-making in general. For any decision, spend your time sorting the world into stuff you like and stuff you don’t like. After that, go fast.” (P. 165)
  
  
• “Once you’ve done the sorting and you’ve got one or more good options, there’s not a big penalty for speeding up. If your options are very close, you can usually just flip a coin and move on. Extra time spent choosing among options that meet your criteria won’t generally gain you much in accuracy over picking by chance.” (p. 166)

Try quitting:

• “Quitting doesn’t deserve its nearly universal negative reputation. Quitting is a powerful tool for defraying opportunity cost and gathering intel, intel that will allow you to make higher-quality decisions about the things you decide to stick to. Whenever you choose to invest your limited resources in an option, you’re doing so with limited information. As your choice plays out, new information will reveal itself. And sometimes that information will tell you that the option you chose isn’t the best option for advancing you toward your goals.”
  
  
• “Part of a good decision process includes asking yourself, “If I pick this option, what’s the cost of quitting?” The lower the cost of changing course in the future, the faster you can make your decision, since the option to quit lowers the impact by reducing opportunity cost.” (p. 169)
  
  Examples:
  
  “Quitting a relationship after the first date costs a lot less than quitting a relationship after getting married.”
  
  “The cost of moving out of a rental house you don’t like is lower than selling and moving out of a house that you own.”
  
  “The cost of changing your mind after moving to a different neighborhood is much less than changing your mind after moving to another country.”
  
  
• “As you learn more, it could be that you figure out that a decision you thought was great actually has much more downside potential than you realized and so has a higher probability to cause you to lose ground rather than gain it. Or it could be that you are gaining ground with the option you chose, but you would gain even more ground if you made a different choice. That’s a good time to consider quitting. Poker players understand this, as does everybody who has heard Kenny Rogers sing “You gotta know when to fold ’em.” (p. 168)

Try making 2 way door decisions:

• “Decisions where the cost to quit is manageable also give you an opportunity to gather information through innovation and experimentation. Amazon founder Jeff Bezos and Virgin Group founder Richard Branson include the concept of a “two-way-door” decision in their decision process. A two-way-door decision is, simply put, a decision where the cost to quit is low.” (p. 170)
  
  
• “When you figure out that you’ve got a two-way-door decision, you can make choices you’re less certain about, giving yourself more low-risk opportunities to expose yourself to the universe of stuff you don’t know. The information you gather in the process will help you implement the menu strategy, improving your accuracy in sorting options into ones you like and ones you don’t.”
  
  
• “Try stuff you can quit. Figure out what you like and what you don’t like. Figure out what works and what doesn’t work. If you want to know if you’d like playing the piano, sign up for some lessons. If you don’t like it, quit. You don’t have to play the piano for the rest of your life. Sign up for improv classes or learn how to cook with a salt block. Of course, you’re going to want to stick to some things. It’s hard to succeed at anything if you don’t have grit and stick-to-itiveness. But being “quitty” allows you to make better choices about when to be gritty.” (p. 170)
  
  
• “When you figure out that you’ve got a two-way-door decision, you can make choices you’re less certain about, giving yourself more low-risk opportunity to expose yourself to the universe of stuff you don’t know.” (p. 170)

If you are making a 1 way door decision, try decision stacking.

• “You will face lots of high-impact, one-way-door decisions that carry a high cost to unwind (like buying a house, or moving to another country, or changing professions). When you know that you have such a decision on the horizon, consider whether there are lower-impact, easier-to-quit decisions that you can stack in front of the high-impact choice to help inform your one-way-door decision.” (p. 170)
  
  
• Decision Stacking: “Finding ways to make low-impact, easy-to-quit decision in advance of a high-impact, harder-to-quit decision.” (p. 171)
  
  
• “Dating is a natural application of decision stacking. If you go out on a lot of dates, you learn more about your likes and dislikes before deciding about a committed relationship.” (p. 170)
  
  
• “Likewise, if you’re thinking about buying a house in a particular neighborhood, you can rent a house in that neighborhood first.” (p. 170)

Try options in parallel.

• “When you are weighing which option to choose, sometimes you can pick more than one of them at the same time. Finding ways to exercise options in parallel also lowers your exposure to the downside.” (p. 171)
  
  Examples:
  
  “he was the model for Gordon Gekko in Wall Street. Legend had it that when Boesky dined at the famous New York City restaurant Tavern on the Green, he would order every item on the menu and take one bite of each.” (p. 171)
  
  “If you’re choosing between two marketing campaigns, you might be able to figure out a way to try both in test markets and see which works better.” (p. 171)
  
  “You could plan a vacation where you visit Paris AND Rome.” (p. 171)
  
  
• “Exercising options in parallel also lowers your exposure to the downside. Even for decisions that have only a 10% chance of going awry, that means that 10% of the time you’ll get a bad outcome. But if you can do a bunch of things at the same time that each have a 10% chance of going awry, the chances that all of them don’t work out becomes vanishingly small. That naturally lowers the penalty for going fast.” (p. 172)
  
  
• “Doing things in parallel does come at a cost. Ordering everything on the menu obviously costs more than ordering one item. When you do more than one thing at a time, there is a cost in the quality of your execution. Your attention is flexible, but it’s not unlimited. You want to balance what you’re gaining by doing multiple things at once with what you’re losing in money, time, and other resources- and in the quality of your execution of multiple options.” (p. 172)

When should you stop analyzing and make a decision?

• “When should you stop analyzing and just decide?” “If your goal is to get to certainty about your choice, you’ll never be finished. Chasing certainty cause analysis paralysis.” (p. 175)
  
  
• “part of a good decision making process includes asking yourself a final question: “Is there information that I could find out that would change my mind?” (p. 175)
  
  Examples:
  
  “You flipped a coin and it comes up “Paris.” Is there information you could find out that would make you switch your choice to Rome?” (p. 175)
  
  “You go through a meticulous hiring process and decide on Candidate A. Is there information you could find out that would switch your choice to a different candidate or cause you to continue your search?” (p. 175)
  
  
• “Pretty much every decision is made with incomplete information. This final question gets you to imagine what information would be helpful if you were omniscient, if you had a crystal ball. If you could attain a state of perfect knowledge, is there something that would cause you to change your mind? If the answer is yes, ask yourself if that information is available, absent omniscience or psychic powers.” (p. 175)
  
  
• “If the answer is “No, there isn’t any information that I could find out,” go ahead and decide. You’re done. It’s time to stop.” (p. 175)
  
  
• “If the answer is yes and you can find out that information, ask the follow-up question of whether you can afford to get it. Information, even if it’s available, can be too expensive for a variety of reasons: time, money, social capital.” (p. 176)
  
  
• “If you think decisive information is available and believe that it’s worth it and you can afford it, then go find it. But if the answer is no, just go ahead and decide.” (p. 176)

Other good quotes:

“That’s why identifying low-impact decisions, especially ones that repeat, is so important. Those types of low-risk decisions give you the opportunity to experiment. Experimentation gets the world to tell you what works and what doesn’t work and helps you figure out your preferences, your likes and dislikes. And all that experimentation will make you better informed, paying off in more accurate sorting.” (p. 166)

“One of the best ways to figure out your likes and dislikes is to try stuff. The faster you make more decisions, the more stuff you can try. That means more opportunities to experiment and poke at the world. That means more opportunities for you to learn new stuff, including new stuff about yourself.” (p. 150)