Decision Making Toolkits
10 mental models for better choices under uncertainty, time pressure, and information overload.
Decision Making Toolkits
Choose well under uncertainty, time pressure, or information overload. Use the right tool for the right type of decision.
Key Mental Models
1. OODA Loop (Observe-Orient-Decide-Act)
Continuous rapid cycles beat slow perfection. Gather data, update your view, decide, act, repeat.
When to use: Fast-moving situations, competitive environments, iterative improvement.
2. Expected Value (EV)
Weigh payoff × probability rather than gut feel. Choose the option with the highest EV when repeatable.
Formula: EV = (Probability of Success × Reward) - (Probability of Failure × Cost)
3. 2×2 Consequence Matrix
High impact / low impact vs. reversible / irreversible. Spend most analysis on high-impact irreversible choices.
- High Impact + Irreversible: Slow down, gather data, get outside perspectives
- Low Impact + Reversible: Decide fast, learn by doing
4. Regret Minimization Framework
Imagine future you at 80. Which choice leaves least regret? Good for life-path questions.
Application: Career changes, relationship decisions, major investments.
5. Reversible vs. Irreversible Doors
If the door easily re-opens, decide fast; if it locks behind you, slow down and gather more info.
6. Pre-Mortem
Assume the project failed; list reasons why. Fix them now and raise success odds.
Process: Imagine failure → List causes → Preventive measures → Implementation
7. Kelly Criterion
For repeated bets with known odds, wager fraction = edge / odds. Maximizes long-term growth, avoids ruin.
Application: Investment sizing, business ventures, any repeatable opportunity.
8. Weighted Scoring Model
List options, pick criteria, assign weights, score. Turns fuzzy trade-offs into a simple table.
- List decision criteria
- Assign importance weights (1-10)
- Score each option (1-10)
- Calculate weighted scores
9. 10/10/10 Rule
How will I feel about this choice in 10 minutes, 10 months, 10 years? Prevents short-term emotion from hijacking long-term goals.
10. Stress-Test with Inversion
Flip the question: "How could this blow up?" Solving for failure reveals blind spots.
Charlie Munger's approach: "Show me where I'm going to die, so I don't go there."
Implementation Guide
Daily Decisions
Use OODA loops and 10/10/10 rule for routine choices. Build speed and confidence.
Major Life Decisions
Combine regret minimization, pre-mortem analysis, and consequence matrix. Take time here.
Business/Investment Decisions
Expected value calculations, Kelly criterion for sizing, weighted scoring for complex trade-offs.
"The best decisions are made with a combination of intuition, experience, and the right framework for the situation." - Jay