When you have taken a fork in the road and you experience a good outcome, you can retrace your steps and think that you have done well by making that decision. You can follow your thought process and judge that you made a sound decision. “It was always going to be the right decision,” you say looking back at the options you surveyed at the fork in the road. But was it and can you extrapolate that decision into wisdom for future decisions?
Just because you had a favourable outcome, does it necessarily mean that you made a sound decision? When the outcome of that decision was determined by a plethora of factors, out of your control, perhaps luck played a bigger role.
Think about profiting from a Bitcoin purchase. How much of any profit can be accredited to your decision-making skills when a tweet from Elon Musk caused the rise in the price, and which allowed you to sell at a profit?
And if you’re judging your decision shortly after the fork in the road, what about what still lies ahead on that road? Wouldn’t that also determine the success of your decision?
Let’s take a decision to sell your retirement savings at the outbreak of the pandemic last year. Three months later, your decision looked great. It looked like you took the right fork in the road. But a year later, your decision had a poor outcome, because, had you stayed invested, your retirement savings pool would have been better off.
What we do as humans, is look for confirmation that we were right. We look for information to prove that our decision at the fork in the road was the right one. But we look through a biased lens. In most cases, many things could have happened to have made it the wrong decision.
We can credit our decision-making skills and extrapolate that into wisdom, when the outcome of those decisions was determined by a few predictable factors, even more so if they were under your control. But when the outcome is highly unpredictable, or not in your control, the outcome is a gamble and not determined by decision-making skills. In which case, “It worked out well,” is a better way of phrasing that choice in hindsight.
If we’re honest with ourselves, we should remain vigilant to the risks our decisions hold. We should remain humble about the prospects. It protects us against translating the success of chance decisions into false wisdom.
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