How to Make Decisions in Uncertain Times

How do you make decisions in uncertain times? Given the higher risks of such times, you should know how to make good decisions. It can help you navigate your situation with confidence.
Fortunately, there is a good principle that you can follow. While it might not make decision making easy, it could make it simple. You can see the factors at play and see the best action to take.
The principle is this: make your decisions as expected value calculations. This is something I learned from Ray Dalio’s Principles.
You see, decision making involves dealing with risks. In most cases, you can’t be sure whether the outcome will be this or that. But you can estimate the probability and return of each outcome. You can then multiply them to get the expected value. The best decision is the one with the highest expected value.
Of course, you don’t need to actually multiply numbers; you only need to mentally estimate them. You can then make effective decisions.
Here are some tips to put this principle into practice.
1. Be well-informed.
To know the expected value of each outcome, you need to estimate its probability and return. The quality of your estimate depends on the quality of your information. The better informed you are, the better your estimate will be. That’s why you should keep yourself well-informed. Feed your mind with high-quality sources.
2. Beware of emotional traps.
Even with good information, you could make bad decisions if you fall into emotional traps. Those tra...

Source: Life Optimizer - April 16, 2020 Category: Consumer Health News Authors: Donald Latumahina Tags: Thinking Source Type: blogs