Decision Making Toolkits

Pick the right tool for the decision. Not every choice needs a spreadsheet.

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.

1. List decision criteria
2. Assign importance weights (1-10)
3. Score each option (1-10)
4. 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