Annie Duke

Like we're sort of guessing at those kinds of things.

So you're right, when we're imagining the different outcomes that could occur, generally, depending on how much luck is involved, depending on whatever sort of our informational state is, there's gonna be a range of possible outcomes that could occur.

And each of those outcomes is gonna have some probability associated with it, but we're only ever gonna observe one of those outcomes.

which means that most of the outcomes that we're imagining aren't gonna happen.

And that's gonna be more true the farther out into the future that you go.

So if I'm trying to predict something that's going to happen in the next minute, I'm probably going to be pretty good at that.

If I'm trying to predict something that's going to happen in a year or two years, most of the things that I'm guessing at aren't going to occur because there's such a big range of things that could occur as you get farther out into the future.

But what's really important though is that doesn't mean that you shouldn't try to predict.

Because you should, you should try to predict because you still have to make a decision

That's your best guess.

The important thing is I make a decision that's my best guess about all the things that might happen, say, in a year.

But then as I accumulate more information, then I will change my guess.

Because eventually, that thing that I was thinking about that might occur in a year is only going to be a week away.

Right.

Like, you know, as I get out, you know, 51 weeks into the future, it will only be a week away, at which point I should be updating what my prediction was.

But that's just, you know, the state of being human.

But it doesn't mean that you shouldn't be trying to forecast what those outcomes are, because it's still going to make you a better decision maker.

Oh, absolutely.

So, you know, with loss aversion, people tend to focus on the downside.

They tend to focus on like those bad outcomes that might occur.